When a company bankcrupt?

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.

1 Like

when profit goes down, stock price goes down 50 percent already. so, we dont need to know about brankrupcy