Financial distress is an indicator of probable bankruptcy and insolvency. A company in distress passes through various stages of decline in financial health before bankruptcy sets in. Bankruptcy or insolvency not only leads to erosion of net worth of the company but also adversely affects all the corporate stakeholders viz investors, lenders, employees, creditors, government and society in general. It becomes very crucial to identify distress signals well in advance so that so that
remedial steps can be taken for company turnaround.
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Author: Prof. Jyoti Nair