TEAM MEMBERS:
01
ALFARO MARTINEZ LESLY MONTSERRAT GONZÁLEZ DE LA PEÑA YESIKA ITZEL
THE ADVANTAGES OF FINANCIAL RATIOS
LONGORIA MORALES MELINA ALEJANDRA RAMOS BECERRIL EVA MARIANA ROSALES GARCÍA KARINA JANETH ROSALES ZÚÑIGA DIIEGO ALBERTO
09
JOINT VENTURES
18 23
CREDIT MANAGEMENT
REORGANIZATION &
LIQUIDATION FOR BANKRUPTCY.
31
WHAT THE AUTHORS THINK: CONCLUSIONS.
What is a Financial Ratio?
Ratios
can
be
Financial ratios may be used by managers within a firm, by current and potential shareholders (owners) of a firm, and by a firm's creditors’’
expressed as a decimal
statements. Often used
Financial analysts use
as earnings yield, while
in accounting, there are
financial
to
others
are
usually
many
compare the strengths
quoted
as
decimal
used to try to evaluate
and
in
numbers,
the
various
If
ratios that are usually
shares in a company are
more than 1, such as
traded
financial
P/E ratio; these latter
market, the market price
are also called multiples.
of the shares is used in
Given any ratio, one can
certain financial ratios.
take its reciprocal; if the
‘’
A financial ratio (or accounting ratio) is a relative
magnitude
of
two selected numerical values taken from an enterprise's
financial
standard
overall
condition corporation organization.
ratios
financial of or
a other
ratios
weaknesses companies.
in
a
value, such as 0.10, or given as an equivalent percent value, such as 10%. Some ratios are usually
quoted
as
percentages, especially ratios that are usually or always less than 1, such
especially
ratio was above 1, the
reciprocal will be below
Benchmarking
If we look at the food
1, and conversely. The
Financial Ratios
and
reciprocal expresses the same information, but may
be
more
understandable:
for
instance, the earnings yield can be compared with bond yields, while the P/E ratio cannot be:
beverage
index, Financial ratios are not very useful on a standalone basis; they must be benchmarked against something.
Analysts
compare ratios against the following:
it
will
companies
ratio include
that
make
prepared
foods
and
some
that
are
distributors. The ratios in this
case
would
be
distorted because one is a
capital-intensive
for example, a P/E ratio
1. The Industry norm -
business and the other
of 20 corresponds to an
This
most
is not. As a result, it is
earnings yield of 5%.
common
of
better to use a cross-
comparison.
Analysts
sectional analysis, i.e.
will
look
for
individually
the
companies that best fit
and
the
Values
used
calculating
in
financial
ratios are taken from the balance sheet, income statement, statement of cash
flows
(sometimes) statement
the
of
earnings. comprise
or
retained These
the
firm's
"accounting statements" or financial statements. The statements' data is based on the accounting method and accounting standards used by the organization.
is
the type
typically
companies same develop
within
industry an
industry
select
company
the
being
analyzed.
average, which they will compare
to
the
company
they
are
evaluating. Ratios per industry
are
also
provided by Bloomberg and the S&P. These are good sources of general industry
information.
Unfortunately, there are several
companies
included in an index that can distort certain ratios.
2. Aggregate economy -
It
is
sometimes
important to analyze a company's ratio over a full economic cycle. This will
help
the
understand
analyst and
estimate a company's performance
in
changing
economic
sheet.
In
this
conditions, such as a
profits
will
recession.
affected. Thus a ratio
also
analysis 3. The company's past performance - This is a very common analysis. It is similar to a timeseries analysis, which looks mostly for trends
case,
of
be
one
company over time or a comparative analysis of companies of different ages
must
be
interpreted
with
FIFO, etc.). It is difficult to generalize about whether a ratio is good or not. A high cash ratio
in
a
historically
classified
growth
company
may
be
interpreted as a good
judgment.
in ratios.
sign, but could also be
Limitations
of
Financial Ratios There
are
some
Seasonal factors can
seen as a sign that the
also
company is no longer a
distort
ratio
analysis. Understanding
growth
seasonal
should command lower
factors
that
important limitations of
affect a business can
financial
ratios
that
reduce the chance of
analysts
should
be
misinterpretation. example,
conscious of:
a
For
retailer's
inventory may be high in Many
equipment, LIFO versus
large
operate divisions
in
industries.
firms
the
summer
in
company
and
valuations. A company may have some good and some bad ratios, making it difficult to tell if it's a good or weak company.
different
preparation for the back-
different
to-school season. As a
In general, ratio analysis
result,
conducted
For
these
the
company's
in
a
companies it is difficult
accounts payable will be
mechanical,
to find a meaningful set
high and its ROA low.
manner is dangerous.
of
industry-average
ratios. Inflation badly
may
have
distorted
company's
a
balance
Different
accounting
practices
can
distort
comparisons even within the
same
company
(leasing versus buying
unthinking
On the other hand, if used intelligently, ratio analysis
can
provide
insightful information.
Advantages
of
Financial Ratios *Save Time and Effort: Financial ratios simplify complex sets of data and save you time as well as effort. The debt-to-asset ratio takes less than a minute to calculate total
by
debt
dividing by
total
assets, both of which are clearly spelled out in the
balance
sheet.
However, the resulting ratio provides an idea about the strategy as well as viability of the business. A high ratio indicates that the firm chose to rely heavily on borrowed
funds
and
may have a hard time
each other. If you are
because
evaluating
two
statements provide only
businesses to hire as
raw information. When
subcontractors,
we
their
*Inter-Firm Comparisons:
Ratios
make it very easy to compare firms against
different
ratios in ratio analysis,
ratios will give you an
at that time, we get
idea
useful
about
which
of
information.
these two companies is
Suppose, we calculate
the more stable choice.
our
The company with a
ratio which is 10times
higher
but
ratio likely
debt-to-asset could to
be
go
more
out
of
interest
coverage
our
competitor
company's
interest
coverage
ratio
is
15
business as a result of
times. It means capacity
defaulting
of
on
and
interest
the
profit
of
our
principal
competitor company is
repayments. However, if
more than us. By seeing
your primary objective is
this,
investing in a business,
decisions for increasing
and you are seeking
our profitability.
high
returns,
we
can
take
the *Locating
company with the higher ratio may be a better
Weakness: Accounting ratios can also be used
bet.
in locating weakness of
obligations
come due.
calculate
respective debt-to-asset
repaying the debt when payment
financial
*Helpful
in
the
company's
Decision Making: All
operations even though
our financial statements
its overall performance
are made for providing
may
information.
Management can then
But
this
be
information is not helpful
pay
for
weakness
decision
making
quite
attention and
good.
to
the take
remedial measures to
decisions:
overcome them.
example,
*Formulating Plans:
Although
accounting used
to
ratios
are
analyze
the
company's past financial performance, they can also
be
used
to
establish future trends of its
financial
performance.
As
result,
they
a help
formulate the company's future plans.
For I
am
a
company.
shares. Before buying
creditors are interested
any company's shares, I
to
will
to
company will repay their
long
debt or not. For this,
be
interested
know company's term
solvency.
So,
I
points
have
to
and
calculate fixed assets to
basis,
net worth ratio, fixed
decisions.
can know the level of
will
be
interested
to
know my return on this
and
investment. ROI, EPS
useful ratios which I can
ordination
calculate
points
and
weak points. Helpful
DPS
are
for
most
knowing
average
they
take
*Helpful
for
employees' decisions: Every employee wants to increase his salary. He also wants to get more
and
more
incentives
from
company. For this, he takes
help
company's
from
profitability
ratios. Profitability ratios will
this.
be
helpful
for
employees to pressure *Helpful
for
current
assets to long term debt
analysis can create co-
Shareholder's
calculate
payment period. On this
I
and
*
they
whether
which,
some weak points. Ratio
strength
know
the
ratio
some
between
All
to
term solvency ratios. In
my money's security, I
strength
loan
ratio and quick liquid
strength
show
period
have to calculate long
resource. After checking
results
provides
invest in any company's
company has all the
financial
or
to
short
fixed assets and its main
points.
credit
shareholder. I want to
No
ordination:
on
company
ratio. On this basis, I
*Helpful in Co-
Company's
goods
Creditors' Creditors persons
for
decisions: are who
those provide
on
the
company
for
increasing their salary.
*Helpful
for
decisions:
Govt. Different
be a safer option due to
present
its
Since
unique
financial
companies analyze their
circumstances,
accounting
example. A construction
considerable
publish on the net and
firm
prepare
print newspapers. Govt.
borrowed
collects
build
ratios
all
information.
and
these
have
heavily
an
to
enormous
take
and
effort
to
review,
they are always at least somewhat
outdated.
Especially for firms that
been
The
publish key data only
soon
once at the beginning of
wrong, Govt. policies will
collect a huge payment
each year, the ratios
become
that will more than make
may be based on data
example, Govt. collects
up
that
income
outstanding debt. Ratios
Govt.
policies.
If
this
might
statements
bridge, which has just
basis,
On
for
conditions.
makes
ratios will
wrong.
data
For
of
all
completed.
company
may
for
all
not
of
its
companies in different
do
communicate
industries for calculation
such
the national income.
can sometimes give the
information
and
wrong impression. DISADVANTAGES *Obsolescence: *Ignore
Bigger
Picture:
The
biggest
strength
of
ratios,
namely their simplicity, is also their greatest weakness. By reducing a complex set of data to a single figure, ratios can sometimes miss the bigger picture. The firm with the higher debt-toasset ratio may actually
Financial
ratios
are
based on the firm's three major
financial
statements: the balance sheet,
the
income
statement and the cash flow
statement.
figures statements
in
The these
reflect
a
snapshot of the past, as opposed to a depiction of the future or even the
is
relevant.
no
longer
THE LEGAL IMPLICATIONS OF A JOINT VENTURE First of you might be asking yourself how would I benefit from a joint
which enter into joint ventures do this for various benefits.
venture? To get this question answered we must first see what this consist of. A
In today’s growing economy, joint
joint venture is a strategic alliance
ventures are one of the top choices, and
between people or entities engaged in
if you're not utilizing this strategic
business. Individuals or organizations
weapon, chances are the competition is,
or at least is considering it, making this
investing
tremendous
resources.
a disadvantage for you. We will go into
Likewise, due to local regulations, some
more detail to answer further questions
markets can only be penetrated via joint
about this competitive advantage,
venturing with a local business. In some
What is a joint venture and how can it benefit my business?
cases it can be used as an advantage
How does a joint venture work?
form a joint venture with a smaller
What are the risks involved?
business in order to quickly obtain
What are the legal implications of a joint venture?
critical intellectual property, technology,
What is a joint venture and how can it benefit my business?
tougher to obtain even as a large
when a , a large company decides to
or resources that would have been
company. Joint ventures are especially popular with businesses in the transport and travel industries that operate in different countries.
This
partnership
can
happen
between two big industries or it can also occur between two small businesses that believe partnering will help them successfully
fight
their
bigger
competitors. As mentioned above, a joint venture is a strategic alliance between people or entities engaged in business. Individuals or organizations which enter into joint ventures do this for
Businesses of any size can use joint ventures
to
strengthen
long-term
relationships or to collaborate on shortterm projects. A joint venture can help a business
grow
faster,
increase
productivity and generate greater profits. With this information we come to the conclusion
that
a
successful
joint
venture can offer:
various benefits.  Companies
with
identical
Access to new markets and distribution networks
products and services have the option to

Increased capacity
join forces in order to enter markets they

Sharing of risks and costs with a
wouldn't or couldn't consider without
partner

Access
to
including
greater
resources,
specialized
staff,
and specific way. For example, a
small
business
with
an
exciting new product might
technology and finance.
want to sell it through a larger Joint ventures often enable growth
company's
distribution
without having to borrow funds or look
network.
The
two
partners
for outside investors. Businesses may
could agree a contract setting
be able to use joint venture partner's
out the terms and conditions of
customer database to market a certain
how this would work.
product, or offer their partner's services and products to the others existing
2. Set up a separate joint venture
customers. Joint venture partners also
business,
benefit from being able to join forces in
company,
purchasing, research and development.
particular
possibly to
a
new
handle
contract.
A
a joint
venture company like this can A joint venture can also be very
be a very flexible option. The
flexible. For example, a joint venture can
partners each own shares in
have a limited life span and only cover
the company and agree how it
part of what you do, thus limiting the
should be managed.
commitment for both parties and the 3. The company could form a
business' exposure.
business limited
How does a joint venture work?
partnership liability
or
a
partnership.
They might even decide to It is important to know first of all
completely
merge
the
the types of joint ventures available.
businesses.
How you set up a joint venture depends
circumstances, this option may
on what you are trying to achieve.
work
better
company. 1. Agree
to
co-operate
with
another business in a limited
In
two
with
some
a
limited
To help decide what form of joint
What are the risks involved?
venture is best, whether the company wants to be involved in managing it or
Because strategic coalitions are
not should be considered. The company
built on trust and convergent goals, one
should also think about what might
of the main risks a company can face
happen if the venture goes wrong and
may occur if the partners are from
how much risk you are prepared to
different cultures. They may not trust
accept.
operating a certain "way" or have divergent
goals.
Even
with
similar
The way you set up your joint
strategic goals, two partners who lack
venture affects how you run it and how
trust in each other may lack the
any profits are shared and taxed. It also
willingness to reciprocate.
affects your liability if the venture goes wrong.
With all this said, it's worth
This
sharing
the
principle
entire
process.
should
taking legal advice to help identify the
govern
Many
best option.
potential joint ventures, including largescale project have failed because of
The main event of a joint
divergent
goals
and
self-serving
venture does not lie in the process
attitudes, which are not in sync with the
itself but in its implementation. We all
principle of the joint venture.
know
what
needs
to
be
done:
specifically, it is necessary to join forces. The "what’s" should be covered in a
Partnering
with
legal agreement that will carefully list
another business can be
which
complex.
party
brings
which
assets
(tangible and intangible) to the joint venture, as well as the objective of this strategic alliance.
It takes time and effort to
build the right relationship. A joint venture concept is only effective when there is a true willingness to move forward
together.
Not
even
signed
contracts have value if mutual trust and acceptance of the terms are not present.
It is actually better not to consider a joint
the
partners
don't
provide
venture project if motives from either
sufficient
side are questioned by the other side.
support in the early stages
As a result the risks involved are simple
leadership
and
Success in a joint venture
to evaluate. It can come down to a
depends
company:
research and analysis of aims
on
thorough
Wasting time
and objectives. This should be
Losing money
followed
Letting
go
of
up
communication
important
with
effective of
the
technology
business plan to everyone
Gaining nothing of importance in
involved.
return Even though these and other risks in joint ventures are present, the rewards
Problems are likely to arise if:
can far outweigh drawbacks. It is
the objectives of the venture
important to completely evaluate your
are
risks, and do your homework before and
not
totally
communicated
to
clear
and
everyone
during the process.
involved
the partners have different
What are the legal implications of a
objectives for the joint venture
joint venture?
there is an unevenness in levels of expertise, investment
A point that can be asked is what legal
or assets brought into the
agreements will we need to put in
venture
place?
by
the
different
partners
and
If a new joint venture company is
management styles result in
forming, a shareholders’ agreement and
poor
the
different
cultures
integration
operation
and
co-
new
company’s
association are crucial.
articles
of
Points that may be covered in these or
restricted, you will have to go through a
in separate agreements include:
local "Validation" of your privileges and of the status of your joint venture.
The geographical locations of the
the financing arrangements for the joint venture
partners and target markets involved will
agreements not to compete with
dictate the degree of legal complexity
the joint venture
when
arrangements for licensing or
operated in the United States, at least
transferring intellectual property
one document will be signed: a joint
in inventions, brands, designs or
venture agreement.
copyright works such as plans or
Once more, there are always legal
manuals to the joint venture
variances depending on the goals and
agreements on any services or
scope of the joint venture.
supplies you will provide to the
business can be one of the most
joint venture
exciting times in one's career. If done
confidentiality agreements
correctly, it can create the dream life
how any disputes will be handled
ones always wanted. Depending on
how the partners can exit the joint
what you want from your business and
venture
how fast you want to get there, joining
any agreements that will continue after
the
joint
venture
is
joint
forces
to
venturing.
create
a
If
both
are
Owning a
more
powerful
presence in your market may be an attractive option.
terminated
This can consist of many things, one can be if one of the partners is not located in the United States, or if both parties
are
foreign,
additional
documents will need to be signed: specifically, a New Legal Entity and a
A
company
may
also
consider
looking at what they main issues are that need to be agreed upon a joint venture
agreement.
Issues
to
be
considered include:
Joint Venture Agreement. Also, in some countries where local market access is
the structure of the joint venture
what the joint venture’s objectives
are
kinds
of
joint
ventures are there?
how it will be managed
how it will be financed and what
will happen if further funding is
What
What is the best way to structure a joint venture?
What issues do I need to
needed in the future
consider when looking for
what assets, including intellectual
a joint venture partner?
property,
both
will
each
What are the main issues
contribute
that need to be agreed
who will work for the new venture
with
what information will be reported
partner?
to each company
a
Does
joint
forming
how profits will be shared
venture
who will own any intellectual
approval?
property created by the joint
Is
collaborating
competitor
how any disputes between the
competition law?
with
what exit routes will be available
allowed
if they want to realize their
law?
joint
with
a
allowed
by
Is agreeing not to compete
handled
investment in the joint venture
a
need regulatory
venture
joint venture partners will be
venture
a
joint by
venture
competition
How do I protect myself while we are negotiating a joint venture?
Overall FAQs people ask about joint ventures can include:
What
due
diligence
is
needed?
What legal agreements will we need to put in place?
What
are
consequences
the
tax of
transferring assets into a
joint venture?
information do I need to
What are the implications
receive?
of putting employees into a joint venture?
property
contribute
to
venture
the
and
intellectual created
we
any
the
What is the best way to terminate a joint venture?
joint
Will I be liable if the joint venture
becomes
insolvent?
joint
venture?
property by
How do we take profits from the joint venture?
How do we handle the intellectual
What accounting and other
In the end, the most immediate
How do we value the
benefits of joint ventures to a small
contribution each of us
business are increasing profits and
makes
sharing costs of a certain project. But in
to
the
joint
venture?
spite of these benefits, joint ventures
How much control will I
face various legal challenges in their
have
formation
over
venture?
the
joint
and
in
operating
them.
Venture partners must agreeably deal with these legal implications to ensure that the alliance meets its objectives.
CREDIT MANAGEMENT WHAT IS DUN & BRADSTREET
companies to manage their supply chains
(D&B)?
information, guidance and support that can
more
effectively
and
profitably
with
facilitate effective, profitable relationships with suppliers and customers.
Dun & Bradstreet (D&B) is the leading provider
of
credit,
In the business-to-business marketplace,
decision-
Dun & Bradstreet is the indispensable
support services worldwide. Customers rely
source of content, information-management
upon D&B to provide the insight they need
expertise
to
customers need to make more informed
marketing,
build
business-to-business purchasing,
profitable,
and
quality
business
relationships with their customers, suppliers,
and
business
insight
that
decisions and build profitable relationships.
and business partners the companies they To
interact with every day.
learn
about
our
comprehensive
database, which now covers more than 73 Our
access systems
and
value-added
solutions make it easy for customers to
million businesses in over 200 countries, and D&B's commitment to quality, read on:
select the information they need, and use it with their technologies of choice to run their
Dun & Bradstreet is recognized around the
businesses effectively. We also are helping
world as the leader in providing global business
expertise
and
information
to
customers.
D&B
helps
customers
to
The D&B D-U-N-S Number
is
D&B's
interpret and utilize D&B's information and
distinctive nine-digit identification sequence,
its own data, making D&B the preferred
which links you to a wealth of quality
source for business expertise.
information products and services originated exclusively from D&B. The D&B D-U-N-S Number is an internationally recognized
At Dun & Bradstreet, we work every
common company identifier in EDI and
business day checking the accuracy and
global electronic commerce transactions.
completeness
of
our
information.
The
knowledge we derive from our database can
The world's most influential standards-
give you the high quality solutions you need
setting organizations, more than 50 global,
faster and fresher than any other source.
industry and trade associations, and the US
We have the industry expertise, quality
Federal Government recognize, recommend
business information and expert technology
and/or require the D&B D-U-N-S Number.
to help you improve operating efficiencies D&B D-U-N-S Numbers are the key to
and increase profitability.
build corporate family relationships in the Industry Experience
D&B file. Since each location of a business may have its own unique D&B D-U-N-S
We have invested over 160 years creating
Number, a large organization is likely to
the world's largest and most comprehensive
have many different D&B D-U-N-S Numbers
source of business related information.
within its corporate "family." D&B links the
Hundreds of millions of pieces of data,
D&B
ranging
trade
subsidiaries, headquarters and branches on
experiences and financial statements, are
more than 73 million corporate family
integrated every day into one file through
members around the world.
from
trade
styles
to
D-U-N-S
Numbers
of
parents,
the use of our unique numbering system, the D&B D-U-N-S速 Number.
A Global Business Standard
WHAT IS A D&B D-U-N-S
The D&B D-U-N-S Number can be used to
NUMBER?
eliminate
help you streamline your transactions, duplicate
files
and
most
importantly, integrate your data with D&B data and information from other sources. It's recognized as a global business standard
by the world's most influential standards-
score that is under 600 will be unable to
setting organizations (ANSI, UN/EDIFACT,
receive a prime mortgage and will typically
ISO) and by more than 50 global industry
need to go to a subprime lender for a
and trade associations, as well as the U.S.
subprime mortgage, which will typically
Federal Government.
have a higher interest rate.
WHAT IS CREDIT SCORE?
New credit scores have been developed in the last decade by companies such as Scorelogix, PRBC, L2C, Innovis etc. which
Credit
Score is a statistically derived
do
not
use
bureau
data
to
predict
person's
creditworthiness. Scorelogix's JSS Credit
creditworthiness that is used by lenders to
Score uses a different set of risk factors,
access the likelihood that a person will
such as the borrower's job stability, income,
repay his or her debts. A credit score is
income sufficiency, and impact of economy,
based on, among other things, a person's
in predicting credit risk, and the use of such
past credit history. It is a number between
alternative credit scores is on the rise.
300 and 850 - the higher the number, the
These new types of credit scores are often
more creditworthy the person is deemed to
combined with FICO or bureau scores to
be.
improve the accuracy of predictions. Most
numeric
expression
of
a
lenders today use some combination of bureau scores and alternative credit scores A FICO score is the most widely used credit
to develop better
scoring system. FICO is an acronym for Fair
borrower's ability to pay.
Isaac
Corporation,
the
company
understanding
of
a
that
provides the credit score model to financial institutions. There are other providers of credit scoring systems as well. Consumers can typically keep their credit scores high by maintaining a long history of always paying their bills on time and not having too much debt.
Scores range from about 350-850 points. The higher your score, the better. The majority of scores are in the 600-700 ranges. Scores of 700 and above are considered "prime" and can get you much
A credit score plays a large role in a lender's
better interest rates on loans. Having a
decision to extend credit and under what
score below 700 does not mean you will be
terms. For example, borrowers with a credit
denied credit, but you'll pay more for it.
Scores can differ from bureau to bureau, but
application or giving you a competitive
the difference won't be more than a few
interest rate.
points assuming all the information on all
Scores are calculated when they are
three is accurate.
created
based
on
the
information
Credit score rating example:
available at that time. So if new
720 – 850
Excellent
information is reported that significantly
690 – 720
Good
650 – 690
Fair
350 – 650
Poor
affects your score, such as a collection account that is reported for the first time, then the next time your score is requested by a lender – or by you – your score will be based on that new
000 – 349
No Credit
information. Similarly, if you dispute something on your credit report that’s having a big impact on your scores and that item is removed – that collection account for example! – your scores can change significantly
next
time
they
are
calculated. If you check your credit through a service that provides credit reports to consumers – Many
creditors,
other
including your free annual credit report or
businesses use your credit score to make a
your free credit score through Credit.com –
quick
it will not affect your credit score in any way.
decision
lenders,
about
and
approving
your
You can check as often as you like with no negative repercussions. The only time checking your report would hurt your scores is if you ask a lender to pull your report for you; for example, you ask your bank or an auto dealer to get your report and show it to you. Credit checks by lenders can affect your scores.
Reorganization and liquidation for
Federal
courts
have
exclusive
jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court.
bankruptcy Bankruptcy laws help people who can no longer pay their creditors get a fresh start – by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect troubled businesses and provide for orderly distributions
to
business
creditors
through reorganization or liquidation.
Most cases are filed under the three main chapters of the Bankruptcy Code –
The primary purposes of the law of bankruptcy are:
start" in life by relieving the
Chapter 7, Chapter 11, and Chapter 13. Federal
courts
have
exclusive
jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court.
To give an honest debtor a "fresh
debtor of most debts, and
To repay creditors in an orderly manner to the extent that the debtor has property available for payment.
*Bankruptcy Cases
A bankruptcy case normally begins by the debtor filing a petition with the bankruptcy court. A petition may be filed by an individual, by a husband and wife
together, or by a corporation or other
In other cases, however, disputes may
entity. The debtor is also required to file
give rise to litigation in a bankruptcy
statements
income,
case over such matters as who owns
liabilities, and the names and addresses
certain property, how it should be used,
of all creditors and how much they are
what the property is worth, how much is
owed.
owed on a debt, whether the debtor
The
listing
assets,
filing
of
the
petition
automatically prevents, or "stays," debt
should
be
discharged
collection actions against the debtor and
debts, or how much money should be
the debtor's property. As long as the
paid
stay remains in effect, creditors cannot
auctioneers,
bring or continue lawsuits, make wage
Litigation in the bankruptcy court is
garnishments, or even make telephone
conducted in much the same way that
calls demanding payment. Creditors
civil cases are handled in the district
receive notice from the clerk of court
court. There may be discovery, pretrial
that the debtor has filed a bankruptcy
proceedings, settlement efforts, and a
petition. Some bankruptcy cases are
trial.
to
from
lawyers, or
certain
accountants,
other
professionals.
filed to allow a debtor to reorganize and establish a plan to repay creditors, while other cases involve liquidation of the
Official Bankruptcy Forms must be
debtor's property. In many bankruptcy
used
cases
the
bankruptcy cases. Procedural Forms
property of individual consumers, there
also may be necessary for use during
is little or no money available from the
the
debtor's estate to pay creditors. As a
proceedings. Required forms for filing
result, in these cases there are few
under a particular chapter, such as
issues or disputes, and the debtor is
chapter 7 or 13, are listed in Procedural
normally granted a "discharge" of most
Form B 200.
involving
liquidation
of
debts without objection. This means that the debtor will no longer be personally liable for repaying the debts.
to
file
course
and
of
take
some
action
in
bankruptcy
*Process:
or whether a debtor should receive a discharge
The
of
the
bankruptcy process are governed by the
however, and is conducted away from
Federal Rules of Bankruptcy Procedure
the courthouse. In cases under chapters
(often called the "Bankruptcy Rules")
7, 12, or 13, and sometimes in chapter
and local rules of each bankruptcy court.
11 cases, this administrative process is
The Bankruptcy Rules contain a set of
carried out by a trustee who is appointed
official forms for use in bankruptcy
to oversee the case.
Bankruptcy
of
Much
bankruptcy process is administrative,
The
aspects
debts.
the
cases.
procedural
of
Code
and
Bankruptcy Rules (and local rules) set forth the formal legal procedures for
A
dealing with the debt problems of
bankruptcy judge is usually very limited.
individuals and businesses.
A typical chapter 7 debtor will not
debtor's
involvement
with
the
appear in court and will not see the bankruptcy judge unless an objection is There is a bankruptcy court for each
raised in the case. A chapter 13 debtor
judicial district in the US. Each state has
may only have to appear before the
one or more districts. There are 90
bankruptcy judge at a plan confirmation
bankruptcy districts across the country.
hearing.
The bankruptcy courts generally have
proceeding at which a debtor must
their own clerk's offices.
appear is the meeting of creditors, which
Usually,
the
only
formal
is usually held at the offices of the U.S. trustee. This meeting is informally called The court official with decision-making
a "341 meeting" because section 341 of
power over federal bankruptcy cases is
the Bankruptcy Code requires that the
the United States bankruptcy judge, a
debtor attend this meeting so that
judicial officer of the United States
creditors can question the debtor about
district court. The bankruptcy judge may
debts and property.
decide any matter connected with a bankruptcy case, such as eligibility to file
Six basic types of bankruptcy cases are
normally receives a discharge just a few
provided for under the Bankruptcy Code,
months
each of which is discussed in this
Amendments to the Bankruptcy Code
publication. The cases are traditionally
enacted in to the Bankruptcy Abuse
given the names of the chapters that
Prevention and Consumer Protection
describe them.
Act of 2005 require the application of a
after
the
petition
is
filed.
"means test" to determine whether individual consumer debtors qualify for Chapter
7,
contemplates
entitled an
Liquidation,
orderly,
court-
relief under chapter 7. If such a debtor's income
is
in
excess
of
certain
supervised procedure by which a trustee
thresholds, the debtor may not be
takes over the assets of the debtor's
eligible for chapter 7 relief.
estate, reduces them to cash, and makes distributions to creditors, subject to the debtor's right to retain certain
Chapter 9, entitled Adjustment of Debts
exempt property and the rights of
of a Municipality, provides essentially for
secured creditors. Because there is
reorganization,
usually little or no nonexempt property in
reorganization under chapter 11. Only a
most chapter 7 cases, there may not be
"municipality" may file under chapter 9,
an actual liquidation of the debtor's
which includes cities and towns, as well
assets. These cases are called "no-
as villages, counties, taxing districts,
asset cases." A creditor holding an
municipal utilities, and school districts.
much
like
a
unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case and the creditor
Chapter 11, entitled Reorganization,
files a proof of claim with the bankruptcy
ordinarily
court. In most chapter 7 cases, if the
enterprises
debtor is an individual, he or she
operating
receives a discharge that releases him
creditors concurrently through a court-
or her from personal liability for certain
approved plan of reorganization. The
dischargeable
chapter 11 debtor usually has the
debts.
The
debtor
is
used
that a
by
desire
business
commercial to and
continue repay
exclusive
right
to
file
of
three years unless the court approves a
reorganization for the first 120 days after
longer period, not exceeding five years.
it files the case and must provide
There is also a trustee in every chapter
creditors with a disclosure statement
12 case whose duties are very similar to
containing
to
those of a chapter 13 trustee. The
enable creditors to evaluate the plan.
chapter 12 trustee's disbursement of
The court ultimately approves (confirms)
payments to creditors under a confirmed
or
of
plan parallels the procedure under
reorganization. Under the confirmed
chapter 13. Chapter 12 allows a family
plan, the debtor can reduce its debts by
farmer or fisherman to continue to
repaying a portion of its obligations and
operate the business while the plan is
discharging others. The debtor can also
being carried out.
information
disapproves
a
plan
adequate
the
plan
terminate burdensome contracts and leases, recover assets, and rescale its to
return
to
Chapter 13, entitled Adjustment of
chapter
11,
the
Debts of an Individual With Regular
debtor normally goes through a period of
Income, is designed for an individual
consolidation
a
debtor who has a regular source of
reduced debt load and a reorganized
income. Chapter 13 is often preferable
business.
to chapter 7 because it enables the
operations
in
order
profitability.
Under
and
emerges
with
debtor to keep a valuable asset, such as a house, and because it allows the Chapter 12, entitled Adjustment of
debtor to propose a "plan" to repay
Debts of a Family Farmer or Fisherman
creditors over time – usually three to five
with Regular Annual Income, provides
years. Chapter 13 is also used by
debt
and
consumer debtors who do not qualify for
fishermen with regular income. The
chapter 7 relief under the means test. At
process under chapter 12 is very similar
a confirmation hearing, the court either
to that of Chapter 13, under which the
approves or disapproves the debtor's
debtor proposes a plan to repay debts
repayment plan, depending on whether
over a period of time – no more than
it
relief
to
family
farmers
meets
the
Bankruptcy
Code's
requirements for confirmation. Chapter 13 is very different from chapter 7 since the chapter 13 debtor usually remains in possession of the property of the estate and
makes
payments
to
creditors,
through the trustee, based on the debtor's anticipated income over the life of the plan. Unlike chapter 7, the debtor does
not
receive
an
immediate
discharge of debts. The debtor must complete the payments required under the
plan
before
the
discharge
garnishments,
and
bankruptcy cases, Bankruptcy Basics provides
an
overview
of
the
Servicemembers' Civil Relief Act, which, among other things, provides protection to members of the military against the entry of default judgments and gives the court the ability to stay proceedings against military debtors.
is
received. The debtor is protected from lawsuits,
In addition to the basic types of
other
creditor actions while the plan is in effect. The discharge is also somewhat broader (i.e., more debts are eliminated) under chapter 13 than the discharge under chapter 7.
This
publication
also
contains
a
description of liquidation proceedings under the Securities Investor Protection Act ("SIPA"). Although the Bankruptcy Code
provides
for
a
stockbroker
liquidation proceeding, it is far more likely that a failing brokerage firm will find itself involved in a SIPA proceeding.
The purpose of Chapter 15, entitled Ancillary Cases,
and is
to
Other provide
Cross-Border an
effective
mechanism for dealing with cases of cross-border
insolvency.
This
publication discusses the applicability of Chapter 15 where a debtor or its property is subject to the laws of the United States and one or more foreign countries.
The purpose of SIPA is to return to investors securities and cash left with failed
brokerages.
Since
being
established by Congress in 1970, the Securities
Investor
Protection
Corporation has protected investors who deposit
stocks
and
bonds
with
brokerage firms by ensuring that every customer's property is protected, up to $500,000 per customer.
the case is filed. In a chapter 7 The bankruptcy process is complex and relies
on
"automatic
legal
concepts
stay,"
like
the
"discharge,"
"exemptions," and "assume." Therefore, the final chapter of this publication is a glossary of
Bankruptcy Terminology
which explains, in layman's terms, most of the legal concepts that apply in cases filed under the Bankruptcy Code.
(liquidation) case, for example, the court usually grants the discharge promptly on expiration of the time fixed for filing a complaint objecting to discharge and the time fixed for filing a motion to dismiss the case for substantial abuse (60 days following the first date set for the 341 meeting) . Typically, this occurs about four months after the date the debtor files the petition with the clerk of the bankruptcy court. In individual chapter
DISCHARGE IN BANKRUPTCY
11 cases, and in cases under chapter 12 (adjustment of debts of a family farmer or fisherman) and 13 (adjustment of debts of an individual with regular
A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts.
income), the court generally grants the discharge as soon as practicable after the debtor completes all payments under the plan. Since a chapter 12 or chapter
13
plan
may
provide
for
payments to be made over three to five years, the discharge typically occurs about four years after the date of filing. The court may deny an individual debtor's discharge in a chapter 7 or 13 case if the debtor fails to complete "an instructional course concerning financial management." The Bankruptcy Code provides
The timing of the discharge varies, depending on the chapter under which
limited
exceptions
to
the
"financial management" requirement if
the
U.S.
trustee
or
administrator
determines
inadequate
educational
bankruptcy there
are
programs
available, or if the debtor is disabled or incapacitated or on active military duty in a combat zone.
What the authors think,
CONCLUSIONS Melina Longoria
Throughout this magazine we learn what a financial ratio is, about credit management regarding Dun & Bradstreet (D&B) and credit scores, the legal implications of a joint venture, and of course last but not least we review reorganization and liquidity in bankruptcy. A financial ratio (or accounting ratio) is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers within a firm, by current and potential shareholders (owners) of a firm, and by a firm's creditors. While reviewing credit management, we learn about Dun & Bradstreet (D&B) which is the leading provider of business-to-business credit, marketing, purchasing, and decision-support services worldwide. Customers rely
upon D&B to provide the insight they need to build profitable, quality business relationships with their customers, suppliers, and business partners the companies they interact with every day. We also gain information about joint ventures. A joint venture is a strategic alliance between people or entities engaged in business. Individuals or organizations which enter into joint ventures do this for various benefits. Businesses of any size can use joint ventures to strengthen long-term relationships or to collaborate on short-term projects. A joint venture can help a business grow faster, increase productivity and generate greater profits. We research how a joint venture works, what are the risks involved, and what are the legal implications of a joint venture are.
Yesika Itzel GonzĂĄlez de la PeĂąa 1550422 Throughout the investigation that we conducted in order to make this magazine, we develop 4 important topics in business matters. These four subjects are related because they evaluate or are helpful measuring the quality of the business, either in formulas or reviewing performances or predicting the future, and the primary objective of them is to ensure that if something is going wrong they are going to find what is it and then it must be fixed. The first subject is financial ratio analysis and is a useful tool for users of financial statement. It has advantages like simplifies the financial statements, helps in comparing
companies of different size with each other, helps in trend analysis which involves comparing a single company over a period. But also it has limitations like the fact that ratio analysis explains relationships between past information while users are more concerned about current and future information. Then we have the Joint ventures which in particular are becoming more popular, especially in capital-intensive industries such as oil and gas exploration, mineral extraction, and metals processing. The basic reason is simple: to save money. Joint ventures give smaller companies the chance to work with larger ones to develop, manufacture, and market new products. Talking about reporting the credit management we have the Duns & Bradsheet which reduce your risk by credit checking your customers and prospects. Checking the financial position of your customers and prospects and being alerted to changes in their status allows you to make informed business decisions. D&B provides commercial and consumer credit reports and analysis on millions of companies and consumers.
Finally, the last topic that we analyze was the Bankruptcy, the hardest question for the owner of a small business considering bankruptcy is whether the business has a future or not. Karina Rosales Garcia #1649109 We have learn about the 4 topics that we see in this magazine the advantage of
financial ratio, joint venture, credit management and finally reorganization and liquidity in Bankruptcy we concluded about these investigation that this topics are related they are necessary for a business. The first topic that we saw in our magazine was financial ratio that means is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. Financial ratios may be used by managers within a firm, by current and potential shareholders (owners) of a firm, and by a firm's creditors. One advantage is Save Time and Effort: and an disadvantage is Ignore Bigger Picture. The second subject is joint venture that5 means is a strategic alliance between people or entities engaged in business. Individuals or organizations which enter into joint ventures do this for various benefits. With this information we come to the conclusion that a successful joint venture can offer: Access to new markets and distribution networks, increased capacity, Sharing of risks and costs with a partner, Access to greater resources, including specialized staff, technology and finance. We also investigate about that is Dun & Bradstreet (D&B) is the leading provider of business-to-business credit, marketing, purchasing, and decision-support services worldwide. In the business-to-business marketplace, Dun & Bradstreet is the indispensable source of content; information-management expertise and business insight that customers need to make more informed decisions and build profitable relationships. And credit score is Credit Score is a statistically derived numeric expression of a person's creditworthiness that is used by lenders to
access the likelihood that a person will repay his or her debts. Eva Mariana Ramos Becerril #1568121 Finance is the science of money management. As enterprises grow and have the need to expand, or search for new opportunities, they always have to look from and for their finances. Throughout this magazine, we’ve been able to explore the financial opportunities, advantages and management strategies which can always stand as important factors when decision making. We’ve seen the importance of using financial ratios as indicators, their advantages and their disadvantages as well. When talking about joint ventures, we can truly find a VAST UNIVERSE of growth opportunities, as well as a vast universe of implications of choosing this pathway as a growth possibility for the company; remember to always be careful with the legal implications when making decisions at any level of the enterprise. In the other hand, I’m pretty sure that most enterprises have at least once dealt with credits… some companies must think of credits as the last financing option, some others might be afraid to take such responsibility. This magazine provides the user guidance for a well-organized credit management. No credit shall be a problem if
it is managed correctly, plus, we explain some options to consider when choosing a credit engagement such as Dun & Bradstreet (D&B) which is the leading provider of business-to-business credit. . Finally, we explain the TERRORIFIC business situation of: bankruptcy. Declare a company in bankruptcy is definitely the toughest and less-desired stage of an enterprise. But, don’t you worry; remember that an appropriate and clever financial management can always keep us away from the horrible bankruptcy. Bankruptcy means the lost of hope and vision of a future scenario for a company… managers must never get blind towards the large world of chances that always exist for conflict and crisis solutions
Lesly Montserrat Alfaro Martínez After I worked with my fellows I kept thinking for example when to choose bankruptcy over debt management? For example if I were in the US and if I had more debt than I can handle, and I am enrolled in a debt management plan. However, my expenses still amount to more than I bring home, and the debt management agent knew this going in. They calculated my debt payment as $344 with the program, and they never advised as to whether I should file for bankruptcy. Should I have filed for bankruptcy instead? If I file for Chapter 7, would I have to include all of my debt
including personal loans? But when I just read our entire job the solution came to my mind . . . First, I should not have been enrolled in a debt management plan if my income level does not allow for the monthly payment. Call the debt management agency as soon as possible, and ask to speak with a supervisor. Have them go over my case from start to finish. If a mistake as big as putting me in an unaffordable plan was made, other issues may have been overlooked as well. Find out if my payment can be lowered to what I can afford. Many agencies can offer a hardship debt management plan titled a "call to action," which lowers the interest rate on my credit card accounts to the lowest possible level. That may decrease my monthly payment enough to make the debt management plan work for me. A reputable credit counseling agency will not enroll persons in a debt management plans unless the counselor has provided a spending plan that balances income and expenses. If I am having trouble meeting my monthly payment because I’m not following the spending plan provided by the agency, then I have a decision to make. Either get back on track and spend only as the plan allows, or increase my income with a part-time job or other income source. Second, bankruptcy is a legal process. However, a counselor can and should go over the pros and cons of filing for bankruptcy and whether it would make sense for me to get a legal opinion for this particular situation. Third, I should find that I absolutely couldn’t afford to make the payment and want to explore bankruptcy; I should contact an attorney who specializes in consumer bankruptcy. To qualify for a Chapter 7 filing (in which debts are forgiven
and not repaid) my income must be below the median income for my state. So, to sum up: if the debt management plan can be made to work, I am usually better off. A bankruptcy can stay on my credit report for up to 10 years. A poor credit report may affect my ability to get a decent apartment, home or insurance for years to come. If I had no other way out, then I may have no choice but to file. I just had to be sure I consider all the potential ramifications before I decide. Diego Alberto Rosales Zúñiga This magazine helped me to expand my point of view of some financial subjects. I consider very important to know about how to take care of a business in many aspects, legal implications and also another things such as how to use financial ratios to manage a business. At first i did not had idea of various topics that are developed in this project, but at the end, i could easily understand, differentiate and apply them, as for example: the financial ratios. They are vital because they can tell you weakness or strengths of a company. And for us, as students of International business, we know that is fundamental to know, as a company, your weakness and strengths. Is amazing because only by investigating and reading this magazine, i could obtain a stronger concept of the financial world, which strategies can I apply when a certain situation arises, how to apply certain tools
like for example credit scores is financial ratios, and so on. It was fun and interesting to create this project. Read it in order to have a more concrete idea of what the finances have for you.
http://www.svtuition.org/2011/12/advantagesof-ratio-analysis.html http://yourbusiness.azcentral.com/advantagesdisadvantages-financial-ratios-1679.html http://accountingexplained.com/financial/ratio s/advantages-limitations
http://credit.about.com/od/glossary/g/credits core.htm
http://www.dnbmex.com.mx/esp_duns.asp http://creditmanagementassociation.org/ser vices/credit-reports/dun-bradstreet/
http://www.investopedia.com/terms/c/credit_ score.asp
Federal Courts. (2012). Bankruptcy. Noviembre, 2014., de United States Courts
Sitio
web:
http://www.uscourts.gov/FederalCourts/ Bankruptcy/BankruptcyBasics.aspx
BIBLIOGRAPHY: http://accountlearning.blogspot.mx/2010/02/i mportance-and-advantages-of-ratio.html http://www.investopedia.com/exam-guide/cfalevel-1/financial-ratios/uses-limitationsratios.asp