Prepaids, Deferred Charges, Intangibles and Other AssetsWarning Signs:
- Low rates of return on invested assets.
- Large amounts of idle cash in non-interest bearing accounts.Significant increase in trade payables.
Process ImprovementPart 1 of a 2 part series Warning Signs: SIGNS A PROCESS NEEDS IMPROVEMENT
- Falling profits with stable or growing sales, stable prices and costs.
- Net sales to total assets out of line with industry averages.
- Unnecessary duplication.
Property and Fixed AssetsPart 1 of a 3 part series Warning Signs:
- Almost fully depreciated assets.
- Depreciation as a percent of sales significantly out of line with industry averages.
- Net sales to net fixed assets significantly out of line with industry averages.
RevenuePart 1 of a 5 part series Warning Signs:
- Falling profits (before owner's compensation).
- Falling owner's compensation.
- Falling or stagnant sales with falling profits
Salary ExpensePart 1 of a 2 part series Warning Signs:
- Rising labor costs as a percent of sales.
- High turnover of employees.
- Evidence of inadequate training.
- Employee/supervisor conflicts.
Selling ExpensePart 1 of a 3 part series Warning Signs:
- Increased selling expenses.
- Increased overhead expenses.
- Significant adverse deviations from budget.
- Significant increase in a particular line item's cost.