The Holistic View of the Symptoms of Financial Health of Businesses

Abstract

Each phase of an enterprise's life cycle brings different impacts on corporate financial health. Financial distress may be associated with the emergence of a crisis, failure and / or bankruptcy. To identify these negative corporate phenomena timely, you need to know the appropriate symptoms. These symptoms occur in every business, but not every business can detect and evaluate them properly. The detection of symptoms of a change in corporate health depends on the definition of financial distress. The aim of the paper is to reveal an overall view of the symptoms of a financially sound business and, on the contrary, the symptoms of its deterioration by analyzing various definitions of financial distress. We analyzed, compared, and summarized the main symptoms of the company's financial health. We found that the main symptoms of a deterioration in financial health include negative cash flow, operational and / or overall losses, high indebtedness and insolvency. On the other hand, we have found that, in addition to traditional financial indicators, other symptoms of financial health, such as market share, stock value, or redundancy, should be examined.

The Influence of Cash Flow, Leverage and Profitability on Investment Decisions in Financial Distress Companies (All Companies Listed on Indonesia Stock Exchange of 2017-2019)

“…Cash outflows are used for transactions for the use of working capital, company investment, payment of interest, dividends, and debt. Financial distress is characterized by a negative cumulative income for at least several consecutive years, losses and poor performance [3].…”

Parsimonious: Initiation of Integrated Financial Health Assessment Model in Preventing Company Bankruptcy

“…According to Nadeem et al (2015), loans affect organizational performance and affect the organization's market value. According to Michalkova et al (2018), symptoms of financial difficulties never occur simultaneously but in particular phases. First, there is a decrease in output volume, a decrease in profitability, an increase in working capital requirements, a decline in the capital structure and finally persistent insolvency.…”

Parsimonious: Initiation of Integrated Financial Health Assessment Model in Preventing Company Bankruptcy (Case Study: PT Pos Indonesia (Persero) Period 2018-2020)

“…According to Black et al, (1973) in Nadeem et al (2015), loans affect organizational performance and affect the organization's market value. According to Michalkova et al (2018), symptoms of financial difficulties never occur simultaneously but in particular phases as follow: there is a decrease in output volume, a decrease in profitability, an increase in working capital requirements, a decline in the capital structure and finally persistent insolvency.…”