No health deteriorates overnight. Sure we have heard of cancer, liver and kidney failure – but there are always some signals. Ignore them, and you are dead.
Similarly there are some signals that you can pick up from a business that warns you about a possible failure in the near future
1. In ability to pay the statutory dues: this could be Service Tax,
Income tax, TDS made from vendor/ employee payments. ….When you are running out
of cash to make these payments, see what is going wrong asap.
2. You have some white elephant assets, but your top management
refuses to part with those assets saying ‘these are strategic assets’.
4. Directors offering to differ their own salary and that of their
5. Customer complaints and employees attrition: The customers and
employees who walk with their talent. When they go they cause two types of
damages – they take a few more clients, and sometimes a lot more employees too.
6. Raising more money- but using it in working capital. This is actually increasing your total overall costs, because of the higher interest amounts. It could also be a signal of the average days outstanding.
The author P V Subramanyam is a Chartered Accountant by qualification and a financial trainer by profession. Writing being a passion he also regularly pens his thought in his blog Subramoney.com