FIN-336 Discussion 1

Start the discussion by introducing yourself and briefly discussing what you hope to gain
from this course. Next, review the case study Cracking the Puzzle of Wuxi Suntech's
Bankruptcy. Discuss how the company handled the 2007–2008 crisis and how it managed
the ethical challenges. What could the company have done better?

My name is Muhammad Rahimi.

After analyzing the case take a look at on Wuxi Suntech’s bankruptcy, the corporation became
not prepared for the global financial or worldwide economic crisis. Wuxi Suntech skilled a
successful IPO being well-received via the market raising $395.70 million of latest equity capital
(Cao Yong, 2017). Due to the financial power and strength won from the success from their IPO,
the business enterprise made competitive financial selections or decision to in addition its
fulfillment because the industry leader. “Suntech had extended its production capacity with the
aid of 240 instances in a decade” (Cao Yong, 2017). This resulted inside the business enterprise
needing to borrow greater and increase its financial institution loans dramatically as the
expansions have been past the new equity capital. “As a result, in 2011, its current ratio turned
into 80%, quick ratio was 61%, and cash ratio was 27%” (Cao Yong, 2017). These ratios showed
that business enterprise could not generate enough cash flow for their quick- and long-time
period liabilities and enterprise operations. They based their aggressive techniques all from a
success IPO and being the industry leader, now not being greater financially clever or smart with
their money.

One moral and ethical difficulty become the finding “in July 2012, Suntech found out that the
bonds did now not exist and they were apparently forgeries” (Cao Yong, 2017). Dr. Shi used the
bonds as collateral in an economic arrangement simplest for them to not exist. Consequently,
maximum of Suntech’s lenders and creditor withdrew their credit score and prompted court cases
leading to Suntech’s financial bankruptcy. Suntech have to not have been overly aggressive with
their growth despite the immediate fulfillment the enterprise at the start obtained. This prompted
a large amount of debt which adds the pressure to usher in more cash drift which has a tendency
to result in unethical behavior or ethical challenges.

Reference
 Cao Yong. (2017). Cracking the Puzzle of Wuxi Suntech's Bankruptcy. HBS No.
NTU125. Singapore: Nanyang Technological University.