Page 37 - Manac test 2 Cycle slides
P. 37

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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