Respuesta :

The common ways through which firms fail financially includes under-capitalization, poor control over cash flow and inadequate expense control.

Majority of firms who failed financially are those firm with outdated financial plan or lack of current trend in the industry.

Why firms fail financially includes:

  • Under-capitalization which is when the firm does not have sufficient capital to conduct normal business operations and pay the creditors.

  • Poor control over cash flow is when the firm does not have firm control over the cash going in and out of the organization.

  • inadequate expense control is when the firm does not effectively control the amount of expenses incurred for operation.

In conclusion, the common ways through which firms fail financially includes under-capitalization, poor control over cash flow and inadequate expense control.

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