The balance sheet is a snapshot of the financial health of a business on the last day of its financial year. A weak balance sheet might show difficulties in paying suppliers and lenders, or the inability to generate funds for future growth and development.
Example: in 2019 the property company Intu saw its debt levels rise from 58% of capital to 73%. This weakening balance sheet forewarned of the company’s collapse into administration in June 2020.
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