Corporate Company Failure

Megginson & Smart (2006, p.898, para3) defined business failure as the unfortunate circumstance of a firm's inability to stay in the business. The financial failure of a company can have a devastating effect on the seven users of financial statements e.g. present and potential investors, customers, creditors, employees, lenders etc. As a result, users of financial statements are interested in predicting not only whether a company will fail, but also when it will fail.

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