Page 9 - MAC4861_2 Finance class slides part 2 - 2. Businesses In Difficulty (UNISA)

BUSINESSES IN DIFFICULTY

Businesses in difficulty

• For instance, the A-score model contains some useful

indicators of typical problems in companies that might

lead to business failure. Some of the key characteristics

of a firm in financial distress include:

• weak governance structures

• weak accounting structures

• mistakes, including excessive borrowing

• symptoms of problems, including employees having low

morale

• The three biggest mistakes that often contribute to

failure is: overtrading, gearing and taking on big

projects.

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