Which of the Following Are Potential Indicators of Financial Distress

question 10

Multiple Choice

Which of the following are potential indicators of financial distress?
(i) A sudden drop in share price
(ii) Increased turnover
(iii) Increased gearing ratio
(iv) Fall in profits

• A) All of them could indicate financial problems
• B) None of these factors would cause much concern, especially in isolation
• C) (i), (iii) and (iv) are bad news, but increased turnover would be good news
• D) (i) and (iv) are indicators, but (ii) and (iii) are improvements to the financial position

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