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"Bankruptcy" and "Bankruptcy" are similar, but not the same meaning.
Insolvency is a word that refers to a wide range of situations in which the company becomes difficult to turn money and continue to normalize business.
On the other hand, bankruptcy is a legal procedure to organize the company’s property through the court and basically end the company.
If the relationship is shortened, it is:
- Bankruptcy = General term of the state and results that the management is gged
- Bankruptcy = bankruptcy processing, liquidation-type legal procedures
It is important to think not only whether it is insolvable, but also whether it is reconstructed or liquid.
Bankruptcy is a state in which the company cannot operate normally
First of all, it is a word that insolvency is widely used everyday.
Tokyo Shoko Research explains insolvency as "not official legal terms". In practice, it is often called "insolvency" in the state where the company is unable to pay, and it is difficult to continue economic activities.
For example:
- Don't return borrowings
- Late payment to the supplier
- No salary
- Banking begins
- Reconstruction and liquidation procedures to the court
In other words, bankruptcy is a large box that represents "the state where the company is stuck".
The reason why it is easy to get here is to think that all of the companies insolvency will be bankrupt.
In fact, insolvency there are multiple processing methods.
| Type | Contents | Direction |
|---|---|---|
| Banking | Convert assets and distribute them to creditors | 清算型 |
| Special | Liquidation of the company after dissolution under the supervision of the court | 清算型 |
| Home | Aim to reconstruct business while ing debts | Reconstruction |
| Company | Aim to maintain and renew business in with changing plans | Reconstruction |
Not “Bankruptcy”
It is easy to organize if you think that there are bankruptcy, civil regeneration, company regeneration, special liquidation etc. in the big frame of bankruptcy.
Bankruptcy is a process of liquidation that ends the company
Bankruptcy is a liquidation type among bankruptcy processing.
In the proceedings of the court, the bankruptcy will exchange the company's property to money and distribute it to the creditors. It is a procedure in which you can organize and finish the remaining property rather than continuing the business of the company.
Features are as follows:
- The company basically disappears
- Sell and cash assets
- Prevailing payments to creditors
- Business co ity is difficult
- The shareholder is the last shareholder
Bankruptcy is a system to organize the property and close the company because it is difficult to reconstruct.
It is a very strict aspect for investors. Because the property left in the company is first turned to the creditors such as employees, taxes, financial institutions, and business partners.
The shareholder is the owner of the company, but at the end of the distribution of residual assets. In bankruptcy, there are cases where the stock value is largely damaged and eventually becomes unvalueable.
A little different from personal bankruptcy
In the news, "Bankruptcy" is used for both companies and individuals.
However, the result is different from company bankruptcy and personal bankruptcy.
| 項目 | Company Bankruptcy | Individual bankruptcy |
|---|---|---|
| Main purpose | Liquidation of corporate assets | Reconstruction and Reconstruction |
| After the procedure | Generally disappears | Individuals continue to live |
| Property Management | Sales and distribution of corporate assets | Some assets may be dis of |
| Impact on Investors | Inc ing shareholder value | Issues directly with stock investment |
Individual self bankruptcy is meaningful to organize debts and make life.
Company bankruptcy is a procedure in the direction of closing the organ itself. If you confuse here, you can make mistakes when reading company news.
“Reconstruction or liquidation” is important for investment
The point to be considered as an investor is whether the subsequent processing is reconstructed or liquidated than the bankruptcy itself.
Liquidation type: bankruptcy and special liquidation
The liquidation type is the procedure of the direction to finish the company.
In this case, it is quite to shareholders.
Simple.
- Priority to the sale of corporate assets
- Receivables are collected first
- Shareholder Returns
- Listed companies have high risk of delisting
Although the stock price is suddenly dropped, it is different from simple allocation.
There is a situation where the stock price is moving intensely at a level such as 1 yen and 2 yen, but it is more likely to be a short-term fund機 rather than the value recovery.
It is difficult for beginners to approach.
Reconstruction: Civil rehabilitation and corporate rehabilitation
Reconstruction is a procedure that aims to leave business.
We aim to re-start the loans and contracts while ブランド the brand, 。, business partners, stores and customer bases.
Sorry, this entry is only available in Japanese.
It is not "the company remains = the shareholder will help".
Reconstruction can occur as follows:
- Increases the value of existing shares
- 100% reduction of shareholder rights disappear
- Become a Sponsor
- Managing Director
- Disco ed
Even if the company survives, it is not possible to protect the value of existing shareholders.
However, it is very easy for beginners to invest.
Reasons for bankruptcy even in black
When considering the risk of bankruptcy, the other is "Kurogata bankruptcy".
If the profit does not come out, the company will pay if the cash is not enough.
For example:
- Sales are recorded
- However, after next month
- Payment of and labor costs
- No additional loans from banks
Even if the accounting is black, you can not pay if there is a lack of cash on the hand.
In corporate analysis, you can see this risk if you only see profit.
There are three things you want to check:
| Search | Check |
|---|---|
| Cash and Deposit | Is there enough funds to use immediately? |
| Interest-bearing debt | Is there too much debt or corporate bonds? |
| Cash Flow | Is it possible to earn cash in business? |
Profit and loss statement is useful.
However, it is cash to actually move the company. The payment deadline does not wait for the accounting profit.
Bankruptcy Risks Seen in Quarterly Results
Bankruptcy risk can be difficult to see only once a year.
In particular, if you look at a listed company, it is practical to follow "What has been worse from the previous quarter" in quarterly financial results. It is not enough if it is red or black. Even if the number is black, it will be considered a dangerous company if the capital is fine.
If you want to see it every quarter, you can see it.
| Check items | 見方 |
|---|---|
| Cash and Deposit | Isn’t it suddenly reduced in 3 months? |
| Cash Flow | Is there a situation where cash is not delivered in the business? |
| Short-term loan | Is there an increase in borrowings close to the repayment period? |
| Payment | Is the payment to the supplier not inflated? |
| Receivables | Are stocks and unrecovered funds not included before sales? |
| Premise of Co ing Companies | Is there a written note or important event? |
It is easy to see here that it is said that it is okay because sales are growing.
Even if sales increase, if the purchase and labor cost are out of the deposit, the hand money will be reduced. In a rapidly growing company, if inventory, receivables, advertising costs, and labor costs are inflated, the repetition of funds becomes harder.
In the quarterly financial results, it is quite note that the following flow is overlapping.
Sales are growing
↓
But sales CF is red
↓
Reduce cash balance
↓
More short-term loans
↓
Sorry, this entry is only available in 日本語.Even if the stock price is low, the company that is deteriorated in this order may only be “weaving uneasy funds” instead of “allocation”.
For beginners, it is better not to judge only PER or sales growth when viewing quarterly financial results. View cash, business CF and short-term loans. This order is quite effective to avoid bankruptcy risk.
Checkpoints for Reading News
If you see the word “Bankruptcy”, “Bankruptcy”, and “ Civil Regeneration” in corporate news, it will be easier to organize by checking in the following order.
- whether bankruptcy or civil regeneration or corporate regeneration
- Is liquid type or reconstruction type?
- Is there a possibility of abolished listing if a listed company?
- What happens to existing shareholders
- When the excess of debt and the deterioration of funds were seen
In particular, it is important that the last "is there a sign in advance?" is at the investor's point.
The risk of bankruptcy appears suddenly, and a sign may appear in the financial statement.
For example:
- Long operating cash flow
- Short-term loans are increasing rapidly
- Cash balance is reduced
- Notes on the premise of co ation companies
- I suffer from borrowing
- There is a delay in the exchange of audit corporations and announcement of financial results
A company with multiple signs should look carefully even if the stock price is low.
- Bankruptcy is the general term of the state in which the company becomes difficult to continue management
- Bankruptcy is a legal process to liquidate the company out of bankruptcy Bankruptcy has reconstruction and liquidation
- In bankruptcy, creditors will be preferred, and shareholders will be affected by the end Even in black, there is a possibility of bankruptcy if there is a lack of cash
- In corporate analysis, see not only profit but also cash balance, loan amount, and sales CF
- In the quarterly financial results, see whether the deterioration of funds has not progressed from the previous quarter
When you see the news of "Bankruptcy", you should not stop thinking there.
Is it bankruptcy or reconstruction procedure? Will the company remain or remain the shareholder value? The view of corporate news is quite different by reading here.
*This article is a general explanation for investment education. For legal and individual investment decisions, please refer to experts and official information.