Fundamentals of Financial Management

24

Corporate Financial Distress

OBJECTIVES

To explain the concept of financial distress

To pinpoint the ratios on the basis of which financial distress can be predicted

To evaluate different ways of handling corporate failure

When not properly managed, a company may become financially distressed and then, if not checked, may finally cease to operate. That is why it is essential for a finance manager to be alert and to watch various indicators that show the advent of financial distress. If at all, financial distress does appear, the finance manager must have an idea of the tools that may be used as a remedial measure on such occasions. The present chapter discusses the very concept of financial distress, the symptoms that indicate any advent ...