Black and white and red all over Lehman Brothers’ inevitable bankruptcy

《Black and white and red all over Lehman Brothers’ inevitable bankruptcy》由会员上传分享，免费在线阅读，更多相关内容在学术论文-天天文库。

1、InternationalJournalofBusinessandSocialScienceVol.2No.20;November2011Blackandwhiteandredallover:LehmanBrothers’inevitablebankruptcysplashedacrossitsfinancialstatementsJULIENLEMAUX,Ph.D.,MSc.(Finance)AssociateprofessorHECMontréal3000,ChemindelaCôteSte-CatherineMontreal,Quebec,H3T2A7CanadaDANIELLEMORI

2、N,Ph.D.,MBA,CAProfessorRoland-ChagnonProfessorshipofAuditHECMontréal3000,ChemindelaCôteSte-CatherineMontreal,Quebec,H3T2A7CanadaAbstractTherecentfinancialcrisisoffersaprimecontexttorevisitthetechniquescurrentlyusedtopredictfirms’financialdistress.Thenumerousbankruptciesandfinancialdifficultiesexperi

3、encedbyUSbanksandfinancialinstitutionsin2008,eventsthatanalystsfailedtopredict,pointtoshortcomingsinexistingfinancialanalysistechniques.Annualandinterimfinancialstatementsproducedbylistedcompaniesarepartoftheinformationthatallstakeholderscanusetojudgetheperformanceandviabilityofthesefirmsoverashort-

4、termhorizon(generally12months,upto24months).Suchanalysesoffinancialstatementscenteronthebalancesheet,whichdepictsthefinancingstructureandtheliquidity/solvencyofanorganization,alongwiththeincomestatement,whichportraysperformanceintermsofprofitsorlossessustained.Thepurposeofthisarticleistoanalyzethest

5、atementsofcashflowsinordertoestablishwhetherthefailureofLehmanBrotherscouldhavebeenpredicted.OuranalysisshowsthatthefollowingsignsoffinancialdistressweredetectableinLehmanBrothers’2005-2007financialstatements:Chronicinabilitytogeneratecashfromoperatingactivities;Massiveandsystematicinvestmentsinwo

6、rkingcapitalitems,andevenmoreintensiveinvestmentsinfinancialinstruments;Systematicuseofexternalfinancing(mainlylong-termdebt)tooffsetoperatingdeficits;Steadydeteriorationofthecashsituationoverthreeconsecutiveyears.AlthoughLehmanBrothershad$7.286billionincashandcashequivalentsonNovember30,2007,thea

7、nalysisofitsstatementofcashflowssignalsmajordysfunctionsinworkingcapitalmanagement.Thisisparticularlystrikingforfinancialinstruments:overathree-yearperiod,theygeneratednetnegativecashflowsof$161.657bi