In recent years a number of companies have gone into liquidation (been ‘wound up’) because they have not been able to meet their liabilities when they fell due. In Australia, there are some well-publicised examples such as ABC Learning, HIH Insurance, One.Tel phone company, Australian Discount Retail and Westpoint.

Required

In groups of three or four, find (via electronic journals) an example of a listed company that has gone into liquidation in the past 5 years. Present a report to the class outlining a brief history of the company and its activities, and the events that led to the liquidation. Obtain the company’s latest annual report (your librarian should be able to help you find the best source for this) and calculate and discuss, in light of the liquidation, the company’s liquidity and financial stability ratios for the preceding 2 years. Is there any indication of financial distress in the management discussion in the annual report? Consider the usefulness of the annual report in identifying potential sources of concern about corporate survival.