Every company starts with the goal of being a market leader. Unfortunately, things do not always happen. Business for many beginners is one of the biggest risks that they may take. Either success or failure may occur. I can not predict anything for business. It is not necessarily law that a business must prosper with funds. The other side may also happen. Default is a situation that means that a company can not repay the obligation.
There are two types of corruption. They are cash payments impossible and the balance sheet bankruptcy. If the company can not repay the obligation, bankruptcy of cash will occur. Balance sheet bankruptcy is when the company has more debt than assets. If there is a fixed asset that the company can not liquidate, there is a possibility of cash collapse. For example, a company with a cash debt of $ 50,000 and a fixed asset value of $ 1 million is said to be suffering from cash refunds. However, since the value of the asset is greater than the liability, the balance sheet is a solvent. Cash refunds are easily managed and will be easily handled if the balance sheet is a solvent. But the reverse is not true.
Companies need to ensure that their assets are always greater than the assets of liabilities at the end of each fiscal year. With this, the company will not fall into a collapse state. In order to deal with problems related to bankruptcy, various countries have various laws. It is the company's responsibility to comply with appropriate laws.
A lower level of unwillingness can be solved by incorporating cash adjustments here. However, if it happens on a large scale, the company will no longer have other options and will enter into liquidation. Yes, Liquidation literally means the termination of a company unit or business. In some cases, it is necessary to liquidate the entire company. In common people's words, it is known as "wipeout". The company decides to liquidate the business only under extreme circumstances. The owner or shareholder does not wish to liquidate the company.
There are two kinds in liquidation. One is forced liquidation and the other is arbitrary liquidation. Mandatory liquidation is the case when the company has to be liquidated because the debt has been exceeded. In the former case, shareholders or the government will liquidate the company. As its name implies, voluntary liquidation is when the company reworks its business and distributes its assets to shareholders. To implement this liquidation, there are different procedures in each country. The company must follow the appropriate procedure.
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