Companies Flashing Financial Danger Signs

[marmar]

Forbes, via Yahoo:



Companies Flashing Financial Danger Signs
by Neil Weinberg

Friday, January 22, 2010


Is the recession over? Is Corporate America out of the woods? Some indicators on Wall Street seem to say yes. Yields on junk bonds are way down. A lot of companies that were on the brink a year ago have refinanced, pushing maturities of debt out to 2014 or later. And if last March you had bought an assortment of shares in the shakiest borrowers you probably would have made a huge profit. Auto parts maker ArvinMeritor was trading at 32 cents at its low on Mar. 11. It has since climbed 3,503% to $11.53.

But financial risk is not out of the system. Last year saw 207 bankruptcies of publicly traded companies. If there's a double-dip recession, this year's count could easily be as high. Leverage is still a big feature of American business.

We asked Audit Integrity, a research boutique in Los Angeles, to rank 2,700 companies for financial risk. The group consists of all public nonfinancial companies with market values of at least $100 million and $150 million in assets. Focusing on the 100 firms at the top in risk, it calculates an average 8% probability of going bust over the next 12 months.

ArvinMeritor is among the high-risk companies. More likely than not, it will sail through 2010 without any financial trouble. But the risk is higher here than at 99% of public companies, in AI's opinion. ............(more)

The complete piece is at: http://finance.yahoo.com/career-work/article/108640/companies-flashing-financial-danger-signs?mod=career-work

[Xipe Totec]

1. And yet, the bonuses to fat cat executives keep rolling in... n/t