Listed Australian companies getting hurt

AAP - The health of most Australian-listed companies is declining as they are hurt by the rapid decline in global economic conditions, with consumer industries the hardest hit, a new survey has found.

According to a survey by corporate consultancy 333 Performance Management, 73 per
cent of Australian companies declined in health over the last year, the largest
proportion to report a deterioration in the 10 years measurements have been taken.
The survey also found that the number of "unhealthy" companies rose to 19 per cent
of the total in 2008 from 15 per cent last year while "at risk" companies grew to 31
per cent, from 22 per cent.
333 managing director Martyn Strickland said all companies should act immediately to
make sure they're in a position to survive the economic slowdown.
"Companies needed to prepare for a prolonged period of difficulty instead of hoping
for a quick economic bounce back," Mr Strickland said in a statement.
"The key to a good corporate fitness program during a downturn was aligning a
company's strategy and operations with an appropriate debt and equity structure."
Companies which deal directly with consumers have been particularly hard hit, with
86 per cent of firms in the consumer industry shown to have declining health.
The survey, which has taken data from 1999 and after, uses a measurement known as
the Z-score to measure the likelihood that a company will go bankrupt.
The Z-score, which 333 says has been shown to be reliable in predicting
bankruptcies, is based on five ratios - working capital to assets, retained earnings
to assets, earnings before interest and tax to assets, market value of equity to
book value of debt and sales to assets.
The sample included 245 members of the All Ordinaries index and excluded financial
services companies.