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chapt2 C&&C > FINMAN8 CHAP3 > Flashcards

FINMAN8 CHAP3 Flashcards

1
Q

is a legal proceeding initiated when a person or
business is unable to repay outstanding debts or obligations.

A

Bankruptcy

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2
Q

The bankruptcy process begins with a petition filed by the

A

debtor

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3
Q

TRUE OR FALSE

All of the debtor’s assets are measured and evaluated, and the
assets may be used to repay a portion of the outstanding debt.

A

TRUE

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4
Q

TRUE/FALSE

bankruptcy and insolvency is the same

A

FALSE. Bankruptcy different from insolvency

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5
Q

Major causes of business failure

A

ECONOMIC FACTORS
❑ industry weakness
❑ poor location / product

FINANCIAL FACTORS
❑ too much debt
❑ insufficient capital

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6
Q

TRUE/FALSE

A large number of businesses fail each year, but the number
in any one year has been a large percentage of the
total business population.

A

FALSE. HAS NEVER BEEN A LARGE PERCENTAGE OF THE TOTAL BUSINESS POPULATION

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7
Q

The failure rate of business has tended to fluctuate with the
state of economy

A

TRUE

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8
Q

Includes SMEs such as stalls, sari-sari
stores, bakery, salon, etc

A

SMALL FIRMS

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9
Q

Includes big corporations such as
manufacturing companies, publicly
listed corporations, etc.

A

LARGE FIRMS

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10
Q

*Lack of capital
*Lack of financing

A

SMALL FIRMS

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11
Q

Tend to be safer
when it comes to
bankruptcy

A

LARGE FIRMS

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12
Q

TWO TYPES OF BANKRUPTCY

A

VOLUNTARY BANKRUPTCY
INVOLUNTARY BANKRUPTCY

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13
Q

A bankruptcy petition filed in federal
court by the distressed firm’s
management. [filed by the debtor]

A

VOLUNTARY BANKRUPTCY

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14
Q

is a bankruptcy case initiated by
a debtor’s creditors. [filed by the
company who lent money to the
borrower]

A

INVOLUNTARY BANKRUPTCY

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15
Q

COMPANY THAT WENT BANKRUPT IN 2021

A

PAL

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16
Q

INFORMAL REMEDIES FOR FINANCIAL DISTRESS?

A

Informal reorganization
Informal liquidation

17
Q

emotional/financial distress

is a state of financial distress in which a person or business is
unable to pay their debts.

A

INSOLVENCY

18
Q

having no resources/assets to finance obligations

A

BANKRUPTCY

19
Q

Asking friends and relatives

A

informal procedures

20
Q

asking banks

A

formal procedures

21
Q

TRUE/FALSE

Informal remedies is more preferable than formal bankruptcy

A

TRUE. bec informal remedies remedies are not strict and doesn’t have contract

22
Q

Which corporations are suitable for informal remedies?

A

not publicly listed and private companies

23
Q

Reasons for bankruptcy

A

Market Conditions
Financing
Poor Decision Making
Poor Planning
Credit Problems.
Job loss
Unexpected
Emergencies

24
Q

HOW TO
OVERCOME AVOID
AND OVERCOME
BANKRUPTCY
(formal and
informal)

A

Create Bare
-Bones
Budget

Seek additional income.

Make debt repayments a
priority.

Sell non
-essential
business assets.

25
Q

you prioritize priorities over non-essential things

A

BARE-BONES BUDGET

26
Q

WHAT IS RA 10142

A

❑Financial Rehabilitation and Insolvency Act (FRIA) of 2010

27
Q

An act providing for the rehabilitation or liquidation of
financially distressed enterprises and individuals

A

Financial Rehabilitation and Insolvency Act (FRIA) of 2010

28
Q

three types of rehabilitation

A

➢ Court-supervised rehabilitation
➢ Pre-negotiated rehabilitation; and
➢ Out-of-court/Formal Restructuring

29
Q

TRUE/FALSE

You can be insolvent without being bankrupt, but not the other way around

A

TRUE

30
Q

potentially reversible
can lead to bankruptcy
can be managed independently

A

INSOLVENCY

31
Q

cannot be reversed
financial last resort
court ordered

A

BANKRUPTCY

32
Q

is commonly used to assess the liability and asset of a
company.

A

DEBT RATIO

33
Q

is when liabilities are greater than the value of the company,
or when a debtor cannot pay the debts they owe

A

insolvency

34
Q

TRUE/FALSE

A company can become insolvent due to a number of situations that
lead to poor cash flow

A

TRUE

35
Q

Companies
in the
Philippines
which
already filed
bankruptcy

A

PHILIPPINES AIRLINES
THE BODY SHOP
REVLON
2GO
GOLD’S GYM
ALASKA
SMDC

chapt2 C&&C (10 decks)

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