Question

What are the signs or financial indicators suggesting a small business is facing financial trouble?

a) Increase in profits and revenue
b) Low debt-to-equity ratio and stable cash flow
c) Rising expenses, declining sales, and late payment of bills
d) Diversification of products and services

Answer 1

The signs of financial trouble in a small business include rising expenses, declining sales, and late payment of bills.

Step-by-step explanation:

The signs or financial indicators suggesting a small business is facing financial trouble include:

• Rising expenses: If a small business is experiencing increasing costs, such as rent, utilities, or employee wages, it can be a sign of financial trouble.
• Declining sales: A decrease in sales revenue over time indicates that the business is struggling to attract and retain customers.
• Late payment of bills: If a small business is consistently late in paying its bills or suppliers, it may be a signal of cash flow problems.

These indicators show that the business is facing financial difficulties and may need to take corrective actions to address the issues.