If a business fails to pay its social security contributions on time, it will be summoned before the Labour Court.
One third of all companies which fail have been summoned by the Social Security(*)
So a Social Security summon is a very bad sign.
(*) Source: Companyweb: results based on our own study into causes of bankruptcies.
In other words, this company is already missing one full financial year.
Companies in difficulties often hold their annual accounts back because they'd rather not reveal the poor figures.
So watch out carefully and ask the company concerned why.
(*) Half of all companies which go under have still not lodged their annual accounts for the year before even after their latest financial year has ended!
(*) Source: Companyweb: results based on our own study into causes of bankruptcies.
A business is liquid if it can meet its short-term payment obligations; if not, it is illiquid.
A liquidity of > 1 is considered very good
(= in theory, this business can pay its short-term liabilities if it realises its current assets).
The way this ratio has changed in recent years is highly significant.
If liquidity falls steadily, this means things are getting increasingly worse, and will end up being unsustainable.
How liquid and profitable a business is gives a good idea of how well it is doing.
| Liquidity | Profitability |
|---|
| + | - |
| + | Healthy | Chronically sick |
| - | Temporarily sick | Dying |
(**)
(**) Source: Handbook "Financial analysis process" by Hubert Ooghe and Charles Van Wymeersch (Intersentia)
