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Yummy Tummy Pty Ltd (Yummy Tummy) is a 44 year old business which manufactures and retails desserts. Yummy Tummy operates 17 shops throughout Australia which

Yummy Tummy Pty Ltd (Yummy Tummy) is a 44 year old business which manufactures and retails desserts. Yummy Tummy operates 17 shops throughout Australia which are leased from shopping centres and its products are also sold through gourmet shops and restaurants. Yummy Tummy employs 400 people, owns two large commercial bakeries freehold and two commercial bakeries subject to mortgage with the Global Domination Bank.

Currently, the business is performing poorly. Yummy tummy is 3 months behind in payment to its flour supplier. So far all employee wages and entitlements have been paid, but the directors are worried about the financial position of the company.

What is the risk to the directors of Yummy Tummy if they take no action to address the company's financial problems but instead simply continue to trade?

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