INTRODUCTIONThe purpose of this paper is to examine the causes of the loss or failure of the Fairchild Semiconductor International Inc. The research will also comprise matters thad had influenced the changes of the business environment that had led to the loss or closure of the company operations during great recession from 2008 to 2009. There are two events that had led to great recession in 2008 and 2009. The recession begins with a financial crisis that start in 2007 until 2008 (Sher. v and Iyanatul. I, 2010) and continue with subprime mortgages in from 2008 to 2009. Both events had led to the closure of several giant financial institutions in the United States of Americas (USA), therefore create a chain reaction in the world financial institutions. In 2007, misfortunes on sub-prime home mortgages started to bring about strains in worldwide financial markets, and in December 2007 the US economy entered a retreat. That year at several large financial firms experienced financial distress, and numerous financial markets experienced financial environment turbulence. Accordingly, the Federal Reserve of USA gave liquidity and backing through a scope of projects roused by a craving to enhance the working of financial markets and establishments, and in this manner point of confining the damage to the US economy. Nonetheless, in the fall of 2008, the financial withdrawal intensified, at last turning out to be sufficiently profound and sufficiently extended to procure the name "the Great Recession". (John. W, 2013). The falling of Lehman Brothers, a leading worldwide bank, in September 2008 just about cuts down the worlds financial system framework. One of the companies that had been impacted by the great recession is Fairchild Semiconductor International Inc. The company had an operation in Penang, Malaysia however, due to the financial turbulence it had close the operations in Penang as part of the cost saving plan. Fairchild Semiconductor International, Inc is the semiconductor business organization established in San Jose, California, United States of America and is a publicly listed company listed on NASDAQ. The companies founded by William Shockley and start its business in 1957. Fairchild, main business activity was specializing in improving and assembling of a complete arrangement of low-to high-control powers for the portable, modern, cloud, car, lighting, and registering commercial enterprises. The company had several plants running around the globe to support its operations and one the plants located in Penang, Malaysia build in 1967. However, in 2015 the company had closed its operations Penang as part of the restructuring plan. The company faces huge blow loss during great recession with the net value loss USD227 million, however it gains profitable for several years after the great depression and now facing business loss again. In order to prevent future losses, restructuring plan had been carried out by cutting 15% total workforce around the world, closing several aging plants around the globe and reduces its capacity. Fairchild management expecting to gain cost savings USD36 million with this plan to counter revenue and losses that continue to decline since 2005.

OBJECTIVE OF THE REPORTThe objective of this research is to examine the causes of the loss or failure of the Fairchild Semiconductor International, Inc during great recession that had taken place from 2008 to 2009. The research will also include what had influenced the changes of the business environment that had led to the loss or closure of the company operations in Penang, Malaysia during great recession from 2008 to 2009.

LITERATURE REVIEW TO SUPPORT YOUR RESEARCHNational Bureau of Economic Research (NBER) website defines great recession as a significant decline in economic activity widely across the economy market, dragging more than a few months, normally visible in real GDP, real income, employment, industrial production, and retailer sales. A great recession begins just after the economy stood at a peak of activity and ends as the economy reaches its trough. Between peak and through, the economy is in an expansion. Expansion is the normal environment and conditions of the economy; most rgreat ecessions are brief and it have been rare in recent decades. A more severe and worse conditions than great recession known great depression, there is no standard definition for the term use. However, Gregory Mankiw (Mankiw 2003) had quoted in his textbookthat There are repeated periods during which real GDP falls, the most tragic instance being the early 1930s. Such times are called recessions, if they are mild and depressions if they are more worstWhereas Cambridge Dictionaries Online defines business loss as a businessthat is losing capital and fundis spendingmore what they have than it can generate. There are several reasons behind that had caused the business loss. Bradley and Rubach (2002) provide a further several specific cause of the business failure which is an outside business scope that includes increase in competition, and general costs of running a business. Financing is one of the causes that includes capital loss, failed to secure new capital, and increase in debt. Next cause related to inside business scope that also includes management error, location, losing clients, and credit trading problem. Another cause related to tax which is included problems with the tax management. Disputes with creditor also a cause for the loss and failure that can include lawsuits, foreclosures, and contract disputes. Personal problem can also become the cause of the failure and loss which can include deaths and divorce. Calamities can also cause loss and failure that include embezzlement, fraud, theft, and accidents. They also state that the cause might also include a trick to buying time for involuntary bankruptcy filings.Some authors, as Zopounidis (1995), propose an extremely broad perspective of the marvels. The default is simply one more word to depict an organization not able to generate profit, whose capital does not make esteem for the most part in light of the fact that the continuum of big business created great business sector has gotten to be conflicting. Such an organization is likewise defaulting on the grounds that it doesn't add to take care of social issues, for example, unemployment or buying force increment. This broad definition is however too extensive to be in any way working what drives another piece of the literature to concentrate on payment issues.Indeed, the failure to reimburse the due payments is an unmistakable sign of default permissions recognizing safe from risky organizations.. This definition is adopted by Ooghe and Van Wymmersch (1996). As per these writers, an organization, it is said to be failing or loss when it can't any longer achieve its financial objectives in a socially and legitimately compiled environment. This misery is additionally described by the way that, amid this procedure, the organization can't satisfy regularly the dedication towards its different accomplices. Sure, the issues which an organization can experience must be broken down as a constant and aggregate process: the disappointment begins with little troubles which are bit by bit changed into more major issues and chaos. Some works, following Beaver (1966), thus tried to propose models in which the non-payment is used like the signal of the solvency or loss of the company.

METHODOLOGY USED TO COMPLETE THE REPORT

The research will carry out by using few methods that had been selected and used to collect and analyzed the data related to Fairchild financial status from 2007 to 2010. Quantitative and qualitative data, analyze method will be used to address the result of the Fairchild financial data and to find out the reason behind the Fairchild financial loss in 2008 and 2009. The data had been collected from various open sources. Fairchild audited financial data had been collected from the Fairchild website on segment investor relations. The financial data 2007 and 2010 included to use as comparison purposes. The general method use in analysing financial statement data is to calculate ratios that represent the key underlying structure, such as profitability, liquidity, efficiency, and a leverage ratio calculation will be used and the result will be analyses to understand Fairchild financial position as at 2008 and 2009.

RESULTS AND ANALYSIS

From the data extract from Fairchild audited financial statements report from 2008 to 2009, below is the growth, profitability and financial ratios for Fairchild Semiconductor International Inc. Below quantitative data is needed to identify and explain the causes of Fairchild financial loss from 2008 to 2009 qualitatively.

Table 1 : Fairchild Financial Qualitative Data (2007 - 2010) (Fairchild, 2015)PROFITABILITY

A standout amongst the most imperative measures of an organization's prosperity is its profit. Profitability proportions, as their name recommends, measure the association's capacity to convey benefits. Profit is important to give financial specialists the arrival they require, and to give assets to reinvestment in the business. On the other hand, individual figures appeared in the income statement/profit and loss represent gross profit and net profit mean next to know without anyone else's input. At the point when these profits figures are communicated as a rate of others, they are more valuable. This rate can then be contrasted and those of earlier years, or with the rates of other comparable organizations.

Table 2 : Fairchild Profitability 2007 - 2010 (Fairchild, 2015)

Gross marginReturn on sales takes a gander at profits in the wake of charging non-production overheads. Gross margin, then again concentrates on the organizations trading activities. At the end of the day, in straightforward terms, the higher profits the better, with poor performances regularly being clarified by costs being too low or expenses being too high.

The Fairchild financial statement shows a sharp decline in profit margins (operating margins) from 2008 to 2009 this due to increase in cost of goods sold and also production overheads that had eliminated all the profit gain.

Table 3 : Fairchild Financial Statement 2007 - 2010 (Fairchild, 2015)

Return on capital employedReturn on capital employed (return on investment or ROI) measures the return that is being gained on the capital in the business. Operating profit (profit before interest) refer to the meaning profit on hand to pay interest to debt investors and dividends to investors. It is therefore will be used as benchmark for comparison purpose with the long-term debt and equity capital invested in the business (non current liabilities + total equity). By similar understanding, if we want to calculate return on ordinary shareholders funds (the return to equity holders), we would utilizing profit after interest and tax divided by total equity). On arrival on capital is important to compensate financial specialists for the dangers they are investing so as to take in the organization. By and large, the higher the ROCE figure, the better it is for speculators. It ought to be contrasted with profits for the offer with speculators on option ventures of a comparative danger. The data from Fairchild financial position show that ROI had fallen sharply from 2008 to 2009 and recovering back in 2010. This largely due to increase in liabilities held by the company to stimulate company operations.

Interest coverThis can also be identified as income gearing. Interest cover shows how many times interest can be paid from earnings. It looks at how many times a companys operating profit had exceeded its interest payable. The higher the figure, the higher chances a company is to be able to settle its interest payments. Anything exceeding four is usually considered to be safe target.There are no details showing Fairchild current interest before 2008. Fairchild current data show that the gearing for 2009 is standing around negative 2.0 and increase sharply during 2010.

Table 4 : Fairchild Financial Health Balance Sheet 2007 - 2010 (Fairchild, 2015)

The Working capital also known as Total assets ratio, frequently found in studies of corporate issues and disputes, is a parameter of the net liquid assets of the company that related to the total capitalization. Working capital is defined as the different between current assets at the end of the year and current liability at the end of the year. Ordinarily, a company having experienced consistent operating losses will have to shrink current assets in relation to total assets. From the data above table in Table 1 Fairchild working capital stood at above USD550million for 2008 and 2009. Thus this prove that this company is incurring operating loss for both period.

LIQUIDITY RATIOS

Liquidity refers to the amount of cash a company can generate and liquidate quickly to settle its debt. Few ratios can be calculated from here to identify Fairchild current liquidity.

Table 5 : Fairchild Finacial Health Liquidity 2007 - 2010 (Fairchild, 2015)

Current ratioThe current ratio compares liabilities that recorded due within the year with cash balances, and assets that should convert into cash within the year. It addresses the companys ability to settle its short-term liabilities. Technically textbooks show that this ratio should exceed 2.0:1 for a company to be able to safely pay its liabilities. However, acceptable current ratios vary between business, and many companies run safely at below the 2:1 level.A very high current ratio is not good. It could signal that a company is too liquid. Cash can be described as an idle asset because it would not generate any return on investment, and carrying too much cash is considered inefficiency due to not fully utilized to generate profits. A high ratio could also mean that the company is not utilizing cheap short-term finance to run its business. Fairchild financial positions that its current ratio is consistent from 2008 to 2009 and stood at 4.0 and this is extremely high and Fairchild status is too liquid as it liabilities held are more than the assets it has. If the thing turns more worst Fairchild can go out of business due to unable to make settlement with creditors.

Acid testThe acid test (or quick ratio) showing that time taken from inventory to convert into cash. Its exclude inventory values of liquid assets keep. Technically textbooks state that this ratio should exceed 1:1 but again many successful companies running below this level. In current practice, a current ratio and acid test should be alongside the companys operating cash flow. A good and healthy cash flow will balance a weak liquidity ratio. The Fairchild financial record shows that its quick ratio had double from 2008 to 2009 and recovering in 2010. This means that Fairchild might be unable to convert its inventory into cash in a short period of time or notice. This clearly shows that Fairchild is having problems to sell its stocks which therefore can relate to recession happen during that period of time. This might had impacted Fairchild markets products.

EFFICIENCY RATIOS

Most companies offer their cliens credit in order to increase their revenue generated. However, giving credit line to clients incurs an opportunity cost as the cash is tied up in financing debts given to the clients, and there is also a chance that risk of the debts not being paid. Therefore, companies will normally seek to collect their debts as soon as possible.

Table 6 : Fairchild Efficiency Ratios 2007 - 2010 (Fairchild, 2015)

Asset turnoverThis shows the company capacity to generate sales from its capital employed. A possible variant is non-current asset turnover (revenue divide by non-current assets). This technically show that the higher the better, but it must be considered that the issues that had caused by overtrading (running a business at a level not sustainable in its capital employed). Usually a high asset turnover will coming together with a low return on sales and vice versa. Retailers generally have high asset turnovers together with low margins: Jack Cohen, the founder of Tesco, famously used the motto Pile it high and sell it cheap!

CONCLUSION

A conclusion can be drawn here that Fairchild is facing financial loss due to weak economy resulting from great recession. This had impacted Fairchild running cost that had increased, although Fairchild manages to generate revenue to cover the cost incurred but this had shown that Fairchild financial position from 2008 to 2009 is critical and fragile due to high cost suddenly and rising sharply. As a result of this financial position a reconstruct plan is needed to cover the loss incurred and to generate a saving for business survivability.

Ratios can be further explain and address Fairchild financial position and the problem by using other ratio formula. Basically ratio analysis also able to detect the business, loss or failure to ensure that impact of the loss can be reduce or business able to save or survive the worst financial position it face. However ratio analysis has several limitations that need to be considered (Christopher P, 2007). Ratio analysis depends on comparative information which is important for any related ratio analysis. A lack and missing information about either industry averages or previous years performance will definitely limit ratio analysis. Accounting ratios are based on statement of comprehensive income or also known as profit and loss accounts and balance sheets, both of which are subject to the weakness of historical cost accounting.

REFERENCES

Beaver, W. (1966). Financial ratios as predictors of failure. Journal of Accounting Research, 4 (Supplement), 71111.Bradley III, D. B. & M. J. Rubach, (2002), Trade Credit and Small Business: A Cause of Business Failures, Small Business Advancement National Center, University of Central Arkansas, http://www.sbaer.uca.edu/research/2002/asbe/papers/02asbe055.pdf 2002.Christopher P. (2007) interpreting financial statement ratios. Student Accountants, February 2007.Mankiw, N. Gregory. 2003.Macroeconomics.Worth Publishers, New York, Fifth Edition. See Chapter 1. page 4.National Bureau of Economic Research (NBER)Ooghe, H, & Van Wymmersch, C. (1996). Trait danalyse financire (6th ed.). Brussels: Presses Universitaires de Namur.Sher. v and Iyanatul. I (2010). The Great Recession of 2008-2009: Causes, Consequences and Policy Responses. IZA Discussion Paper.John. W (2013). The great recession and its aftermath. Retrieve from http://www.federalreservehistory.org/Period/Essay/15.Fairchild. (2015). Fairchild Semiconductor. Retrieved from https://www.fairchildsemi.com/ Zopounidis, C. (1995). Evaluation du risque de dfaillance de lentreprise: Mthodes et cas dapplication. Paris: Economica.

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