The Pros And Cons Of Corporate Bankruptcy

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Over the past few years it has not been uncommon for corporations to consider filing for bankruptcy due to ongoing financial difficulties. Significant and well-known retailers such as Target, Sears and Toys R Us have all filed for bankruptcy, and a few have closed their doors permanently. Target remains a predominant retail establishment in the United States, however they were not able to continue operating in the Canadian marketplace. Various factors such as geographical location, price sensitivity of consumers and increased competition all could have contributed to the eventual departure of Target from the Canadian marketplace. My main focus in this paper will be on why corporations of all size would consider filing for bankruptcy. There…show more content…
If looked at in the beneficial circumstance consumers can benefit from these actions. Reason being remaining firms producing similar goods continues to do so and thereby sell goods at a lower price. When it comes to economics we know that companies like to drive their markets towards a state of long-run equilibrium in which these firms remain in existence production at a min average cost. According to “The corporate Bankruptcy Decisions” in 1984 let alone 62,000 businesses file for bankruptcy, this has definitely increased within the past 33 years. It seams to be that corporations tend to take the easy route by claiming for bankruptcies leaving many creditors with losses. Although we cannot blame such corporates, in today’s time this is known as one of the hardest time to search for jobs and stay alive as a business. Looking at it form the economic view bankruptcies are not the best thing to do, especially in today’s economic many of these corporates and small businesses help contribute to our economy. Many of these bankruptcies occur due to government decisions such as drastic minimum wage increases from $11.45 to $14.00 and $15.00 by…show more content…
This suggests that when the values are separated for a period of time there is still a positive correlation to the bankruptcy rate. The R2 value for the model is significantly on the higher end with a 0.957 value. As we know this value is to be between 0%-100% the value shows that this model has a good line of best fit. Although closer it is to 100% it shows that there is a perfect fit. In my case it is on the higher end, which is relatively unlikely, although in my case this shows that the model is a good fit showing that the good fit is correlated between my dependent variable and independent variable. The adjusted R2 value is altered from the original R2 based on the number of predictors that are influencing the model. The adjusted R2 will influence the addition of new terms positively if the value has increased from the original R2 but in my case it tends to stay the same with a change to 0.956. This indicated that 95% of the data collected is close to the line of best fit With that small difference it cleary shows that the value have decreased proving that the number of predictor variables will negatively affect the dependent

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