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Company failure definition: Lernen beginnen
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Company unable to achieve satisfactory return over long-term.
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Company failures examples: i n f o r m a t i v e Lernen beginnen
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Strategic drift. | Poor leadership and management. | Failure co control cash. Failure to control costs. | failure to build a good team. | Tougher market conditions. | Failure to adapt to changes in the environment. | Failure of large project.
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Qualitative symptoms of company failure: 3 Lernen beginnen
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Press information. | Environmental or external matters information.* | Report information (Chairman's or director's). PER *such as changes in the market.
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Quantitative symptoms of failure: 2 Lernen beginnen
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Problems with key liquidity, gearing and profitability ratios. | Other problems in the published accounts such as a worsening cash position or large increases in intangible fixed assets.
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Quantitative models use financial information to predict if an organisation is likely... Lernen beginnen
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to fail within a specified period. eg. The Z score ÷
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Advantages of The Z Score: 2 Lernen beginnen
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Calculation simple. | Objective measure. CO
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Disadvantages of The Z Score. # Lernen beginnen
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Manipulation venerable. | Analysis needed to fully understand the situation. | Short-term predictor. | Old and specific* model. | Not a definite predictor. MASON *Most models are more than 50 years old and are based on companies in a specific industry and country.
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Qualitative models use a variety of qualitative and some... Lernen beginnen
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non-accounting factors to predict corporate failure. Example: the Argenti Model.
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Advantages of the Argenti Model: 3 Lernen beginnen
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Financial and non-financial measures. | Investigator judgments ability. | Turnaround potential. FIT
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Disadvantages of the Argenti Model: 2 Lernen beginnen
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Based on SUBJECTIVE judgement. | Requires a LARGE AMOUNT of financial and non-financial information.
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Argenti Model doesn't consider: 3 Lernen beginnen
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Company specific variables. | External factors (such as inflation). | General characteristic (such as industry type). CEG
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Argenti Model is only a ... of a point in time and does not indicate when failure occur. Lernen beginnen
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snapshot of a point in time
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Argenti Model does not contain a defined... Lernen beginnen
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list of defects, mistakes or symptoms.
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Performance improvement strategies examples: 3 Lernen beginnen
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Major strategic change. | Ensuring different parts of the business are in DIFFERENT STAGES of the LIFE CYCLE. | Learning from mistakes by performing DUE DILIGENCE ahead of an investment. MLD + Accept that there is a problem and move on to solution. | Put in controls to prevent further loss. | Acquiring new businesses to spread the risk. | Managing major risk such as fluctuation in commodity prices.
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PM System will need to reflect the performance improvement tools: 3 Lernen beginnen
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Establish a LINK between new strategic goals and CFSs/KPIs. | CONTINUOUS review of actual performance against target. | Address additional TRAINING needs. LCT + Set performance targets at all levels relating to the achievement of of strategic objectives.
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Long-term survival necessitates consideration of life-cycle issues: 2 Lernen beginnen
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There will be different CFS and KPIs at different stages in the life-cycle. | The stages of the life-cycle have different intrinsic levels of risk which should be understood and responded to. Introduction | Growth | Maturity | Decline It will be the scale of the financial resources which the organisation call on over the life of its products which will dictate its survival.
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