@Risk

Nearly half (49 percent) of Australia’s listed companies are either “at risk” or “unhealthy” financially, according to this year’s Australian Corporate Health Index, conducted by 333 Consulting.

The Index uses data on five key ratios (capital assets, retained earnings, earnings before interest and tax, market value of equity, book value of debt, and sales) to measure corporate health, and even though there have been some encouraging signs of economic recovery here in the US, the results of this study show that the global financial crisis is a long way from being over.

Here are a few more findings that I found particularly interesting:

• 71% of listed companies ended the financial year in worse shape than a year ago.

• The median Z score of all companies suffered its biggest drop since the data was first analyzed six years ago, down 19% from 2.97 to 2.42

• A third of companies can be classified as unhealthy, while another third is at risk of becoming unhealthy. (Warning: Be on the lookout for zombies like this in your supply chain.)

• Only one third of companies could be ranked as healthy.

What can your company do to remain healthy and position itself for the recovery? 333 Consulting suggests that you adopt these five strategies:

• Be realistic and assess risk.

• Use multiple cash-generating strategies.

• Fix the core business.

• Take a holistic approach, rather than focusing on cost alone.

• Rebalance capital structure to meet strategy.