CORPORATE FAILURE IN UK RETAIL SECTOR

The Corporate Failure in UK Retail Sector

Table of Contents

CHAPTER NO 1: INTRODUCTION3

Research Questions4

CHAPTER NO 2: LITERATURE REVIEW5

CHAPTER NO 3: RESEARCH DESIGN AND METHODOLOGY12

Contingency Plan12

CHAPTER NO 1: INTRODUCTION

The study is related to the corporate failure in UK retail sector which particularly focuses on household retail companies that is the companies that belong to furniture industry. Corporate failure is defined as a situation in which an organization is not able to fulfill its financial obligations that include the payment to its suppliers, wages and other debts. Moreover, a company is in a situation of corporate failure or bankruptcy from the time an insolvency procedure is opened against the company, this process occurs when an enterprise is in a state of insolvency, that is to say, it is no longer able to meet its liabilities with its available assets. This phenomenon that is corporate failure in UK retail sector is important to study as it guides towards the basic causes or the reasons behind the corporate failure of companies that play crucial part in the success of a company. In relation to this, if an organization owes more liabilities than the company earns over significant time period and can no longer trade in the market, then this situation reflects that the company is going towards the corporate failure. Moreover, it is observed that over the last few years, many cases pertaining to insolvency and corporate failure in UK took place as around 12000 organizations have declared insolvency in England and Wales and the failure of the UK retail sector companies was as about fifty percent for five year period.

The aim of this study is to know the reasons of failure of UK household retail companies; moreover, to analyze the above statement multivariate analysis by Altman will be used in order to compare two sets of companies in the UK retail sector which belong to UK furniture industry. In addition to this, the study includes the failed and non-failed companies of furniture industry which will help in comparing the performance of corporate governance of companies in relation to failed and non-failed companies of furniture industry.

In this context, financial ratios play important part which help in identifying the performance of companies; moreover, with reference to financial ratios, the study will also use the Altman Z-Score which is a simple method that is used to analyze the financial strength of a company. This study is different from past studies that are carried out in respect of corporate failure in UK in various respects. As financial ratios will be used to know the performance of the companies that belong to furniture industry which will give indication for financial distress in companies, and secondly Altman Z-Score will be applied to know the financial strength of the companies which will ultimately guide towards the corporate failure of companies.

Research Questions

Why do retail companies fail in the UK retail sector?

How the financial ratios can predict corporate failure?

CHAPTER NO 2: LITERATURE REVIEW

Corporate failure has several names and ...