What degree of financial difficulty will a turnaround client typically be experiencing?
It ranges from mild to quite severe. On the mild side, vendor and bank debt have grown as a result of losses and negative cash flow. Pressures, though, are not yet extreme. The current ratio is still above 1.0 and there is at least modest net worth. With companies in severe distress, creditor pressures are intense and have become very disruptive to running the business. Here, FMA involvement will tend to be much more intensive at the start in order to help hold everything together from a cash flow perspective.
