The Business Doctor - John M. Leask II CPA/ABV, CVA

Prepaids, Deferred Charges, Intangibles and Other Assets

Warning Signs:
    • Low rates of return on invested assets.
    • Large amounts of idle cash in non-interest bearing accounts.Significant increase in trade payables.

 

Process Improvement

Part 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 Assets

Part 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.

 

Revenue

Part 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 Expense

Part 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 Expense

Part 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.