Identifying a Business in Struggle

It has become quite common in these days of economic turmoil to hear and read about companies that are struggling.  It is with this understanding that we want to outline a few points that we believe can help someone determine if a company is in fact struggling.

The first point to review is the group’s recent financial filings, which will either be readily available or easy to find in public records if the company under scrutiny is publicly traded.  A brief analysis can pinpoint areas of concern, such as a steady decrease in cash, repeated operating losses, or a decrease in assets coupled with an increase in liabilities.

Other “red flags” perhaps not found in the financial statements is top management or revenue streams being divested.   Cutting performance pay or dividend payment from company staples of operation could also be to concern for the business environment ahead.

Again, in times of economic correction, it is not uncommon for companies to “tighten their belts” but some cost-saving measures foreshadow much turbulent times ahead than others.

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Respectfully,

Capital Corp Merchant Banking, Inc.