What are the major causes of business failure?
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What are the major causes of business failure? |
Answer and Explanation
Explanation
Economic and financial factors or a combination of both factors cause a decline in the present value of future cash flows, leading to business failures. The economic factors include in...
Explanation
Economic and financial factors or a combination of both factors cause a decline in the present value of future cash flows, leading to business failures. The economic factors include industry trends, company-specific problems, changes in consumer preferences, and technology change. The financial factors include a high percentage of debt in the capital structure or changes in interest rates.
Verified Answer
Business failure occurs due to a decline in the present value of future cash flows caused by economic and financial factors or a combination of both factors.
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