(a) (i) Discuss the theories, or arguments, which suggest that financial analysis can be used to

(a) (i) Discuss the theories, or arguments, which suggest that financial analysis can be used to forecast the probability of a given firm’s failure; and

(ii) explain why such an analysis, even if properly applied, may not always predict failure.

(b) Discuss the following statement: ‘It is always a sound rule to liquidate a company if its liquidation value is above its value as a going concern.’