I want to know when a company bankrupt. which chapter in which book in CFA program will explain this point, pls, tell me
thank you very much.
I don’t have the latest addition of the books, but I’m pretty sure there’s a glossary in the back. Search under “B” or try Google.
You can download the study sessions here:
It looks like it is reading 55 that covers bankriptcy.
I think it’s worth noting that ‘bankruptcy’ is a legal condition, not a financial one.
The financial condition that applies is insolvency. It occurs when a company’s Total Liabilities exceed its Total Assets. In that situation, the only way that its balance sheet can ‘balance’ is for Shareholder Equity to be negative.
sorry.
when profit goes down, stock price goes down 50 percent already. so, we dont need to know about brankrupcy