Keep an eye on your cash flow, and look out for these warning signs that could signify problems:
- Decreased liquidity: running out of working capital.
- Overtrading: turning inventories faster than trade averages.
- Excessive short-term debt.
- Missing discounts: payables over terms.
- Slow collections: outstanding receivables piling up.
This material was adapted from Chapter 7 of Financial Troubleshooting by David H. Bangs Jr. and Michael Pellecchia.
Aug 15, 2000