Identifying Key Indicators of Corporate Distress PPT

This PPT slide, part of the 24-slide Crisis Management: 10 First Steps PowerPoint presentation, outlines critical indicators of distress that a company may face, categorized into 4 main areas: Working Capital/Liquidity, Financial, Profitability and Industry Outlook, and Employees. Each category lists specific signs that suggest a company is struggling.

In the Working Capital/Liquidity section, key signs include declining or negative free cash flow and unresolved near-term debt maturities. These factors can severely impact a company's ability to operate effectively. The presence of large contingent liabilities and increased accounts payable further complicates the financial picture, indicating potential cash flow issues.

The Financial section highlights declining stock prices and liquidity challenges. Inability to meet debt covenants and repeated bank amendments signal deeper financial troubles. Resignations of key finance personnel can disrupt operations and decision-making processes, exacerbating the situation.

Profitability and Industry Outlook points to shrinking EBITDA margins and reduced capital-investment programs. A going-concern opinion from auditors can indicate that the company may not be able to continue operating in the foreseeable future. Deteriorating industry fundamentals and adverse regulatory environments add layers of risk that can hinder recovery efforts.

Lastly, the Employees category addresses workforce-related issues. Large or unplanned reductions in staff and management turnover can lead to operational instability. Disruption in unionized workforces may further complicate recovery, as it can impact morale and productivity.

Recognizing these distress signals is crucial for any organization aiming to initiate a turnaround strategy. Understanding the multifaceted nature of these signs can help executives prioritize interventions and allocate resources effectively.

This slide is part of the Crisis Management: 10 First Steps PowerPoint presentation.

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