Financial Distress And Its Effects On Society

There is a widespread concern about rising levels of debt. Debt can become disastrous for those who live alone or those families who are already having problems with supporting their family. The people who might be struck by debt, they might have trouble recovering. Debt can cause Americans to lose their homes and stability they need to feed, and shelter their families. Although debt comes upon us Americans quickly, people can see debt as terrible thing to be stuck with. It has many disadvantages that can devastate to people.

Many companies in the United States are struggling to survive. These companies are experiencing significant decreases in revenue, reduced assets, and increases in liabilities. Companies that already filed, or are at-risk for filing bankruptcy are struggling with keeping up with their competitors, causing the companies to lose their value. When a company files for bankruptcy, the company no longer gets to make the business decisions. The bankruptcy courts begin to make the decisions for the companies in efforts to restore the businesses. If the company is unable to revive itself from bankruptcy status, the company goes out of business. If this occurs, the company must sell everything it owns in order to compensate its shareholders and repay

However, in this society, an undercurrent of a financial crisis and deep personal anguish lays.

Debt serves as a huge stress factor amongst many individuals within America’s society. Student loans have a tremendous impact on younger individual’s lives and can affect their futures as well. Many individuals are unable to live normal lives, and are rather trapped with debt serving as a burden on their shoulders. Student loans affect about thirty-seven percent of individuals in America. For many students financial aid or private loans are the only source of payments for a higher education. Student debt inhibits graduates from spending money on personal items and consumer goods. In order to diminish this, lenders should be required to forgive student loans if students are unable to repay their debt through no fault of their own.

b. Other indications of financial difficulties (default on loan or similar agreements, arrearages in dividends, denial of usual trade credit from suppliers, restructuring of debt, noncompliance with statutory capital requirements, the need to seek new sources or methods of financing, or the need to dispose of substantial assets).

Together with the decline in demand in North America and depressed markets in Europe and the Third World, these high costs of debt and inaccessible capital market formed the cause of the financial distress Massey went through.

Quickly these corporations became known as the Fallen Angels and they were looking to rebound in any way possible. Operating managers at the time believed the corporations would rebound fairly easily because corporations would have no choice but to put all their attention on controlling their debt. However, in a situation such as this, close precision and execution is required otherwise the smallest mistake can lead to failure. According to Warren Buffet, “a plan that requires dodging them all is a plan for disaster.” The accumulation of debt continued to rise and not even the healthiest of corporations could obtain the capital to finance it. Even though businesses continued to suffer from accumulating debt, Investment Bankers noted that researchers found over time “higher interest rates received from low grade bonds had more than compensated for their higher rate of default.” From this information, Investment Bankers saw this accumulation of debt as an opportunity for investors. They concluded it was beneficial to have a diversified portfolio of junk bonds because the returns would be higher than a portfolio of high grade bonds. However Warren Buffet disagrees and discovered a hole in this fundamental approach by the Investment Bankers.

The recent financial crisis has a huge impact on systemic Important Financial Institutions; it’s distressing effect can be felt in almost every business area and process of a bank. A fairly large literature investigates the impact of financial crisis on large, complex and interconnected banks. The great recession did affect banks in different ways, depending on the funding capability of each bank. Kapan and Minoiu (2013) find that banks that were ex ante more dependent on market funding and had lower structural liquidity reduced supply of credit more than other banks during crisis. The ability of banks to generate interest income during the financial crisis was hampered because there was a vast reduction in bank lending to individuals and

All the costs by a company can be broken into two categories, fixed costs and variable costs. Costs that are independent of output are called fixed costs. Fixed costs remain constant throughout the relevant range and are usually considered sunk for the relevant range. Buildings and machinery are included inputs that cannot be adjusted in the short term. They are only fixed in relation to the quantity of production for a certain time period. The cost of all inputs is variable, in the long run.

Financial Crisis between 2007 and 2009 was the worst economic crisis after the Great Depression in 1930s. This crisis was a worldwide crisis as it affected the financial system globally and led to collapse in economy. Financial intermediation is a process of banks that take funds from the depositor and lend them out to the borrower. In the financial transaction, financial intermediary acts as the middleman between two parties. Commercial bank, investment banks, pension funds are the example for financial intermediation. This kind of financial intermediary usually provide mortgage to the lender.

A high debt burden increases the danger that goes bankrupt in the event that they settle on a poor business choice. Expanding dangers can build YTL Corporation's obligation interest instalments.

The debt crisis was know as financial crisis and defined as a point of a country's foreign debt accumulation exceed it's earning power and the country has no ability to repay the debt.

According to the wellbeing assessment results, the assessment indicated that I am struggling (moderate or inconsistent) with my wellbeing as the five elements showed all my scores under 6. I received a score of 5 on career wellbeing, a score of 6 on social wellbeing, a score of 3 on financial wellbeing, a score of 4 on physical wellbeing, and score of 3 on community wellbeing. I was honestly shocked and surprised when I read through the descriptions of the elements because it all described areas that I am struggling at this point in my life. As I reflected on the results of this assessment, it helped me to think about the overarching problem that hinders me from having a thriving life which is the financial struggles. I honestly think that financial struggles have negatively affected the overall wellbeing as it impacted and shaped the rest of the four elements.

Financial distress is defined as a low cash flow state of a firm in which it incurs losses without being insolvent or financial distress is a term in Corporate Finance used to indicate a condition when promises to creditors of a company are broken or honored with difficulty. Financial distress is different from insolvency. Financially distressed companies have lower profitability, higher leverage, lower past excess returns and larger size compared to active companies.

For instance, the students interviewed may have different definitions of subjective well-being and of what a challenging financial situation is. A qualitative methodology will allow the students to answer the questions asked in a manner that best expands on their understanding. As the researcher, I am interested in how the students interviewed respond to the questions asked, as the data analysis would have to be described in depth after concluding all interviews with the students.