Skip to Content
April 25, 2017 Article 1 min read

These financial and operational indicators will help you know when it's time to take action.

 modern white empty board room

It's natural to hope distress signals in your business are a temporary blip, but ignoring them won't help the bottom line. The sooner you take action, the better – and the following financial and operations signs will help you know when it's time.


  1.  Poor delivery performance, missing shipments 
  2. Inbound and outbound shipping costs greater than 3 percent of sales
  3. Process capability less than 1.67 Cpk
  4. Excessive inventory, especially work-in-progress (WIP) 
  5. Capacity utilization less than 80 percent and more than 90 percent
  6. OEE low or not a key metric
  7. Lack of key process metrics, only results/outcomes measures
  8. Unbalanced labor productivity, either excessive overtime to meet production or idle staff time
  9. High scrap rate; scrap bins are full/high volume of rework
  10. Disorganized shop, dirty machines, poorly kept grounds, office clutter
  11. Excessive material movement
  12. Excessive turnover, unplanned absenteeism, and tardiness


  1.  Difficulty in meeting payroll obligations or making key vendor payments (beyond normal business terms) 
  2. Declining total revenue or declining gross margin percentage
  3. Sustained losses, especially for more than 12 months
  4. Unbalanced inventory: excess slow moving inventory for some SKUs and back-orders on other SKUs (unable to meet production or sales plans because product is not available)
  5. Increased reliance on expedited shipments
  6. Guessing on the pricing of new work because of outdated costing/estimating systems
  7. Key employee turnover, especially CFO or controller
  8. Inability to reinvest in business and declining trends in capital expenditures
  9. Consistently low availability on revolving credit agreement
  10. Increasingly difficult discussions with lenders, including pressure to hire an outside consultant
  11. Violating covenants, especially fixed charge coverage ratio
  12. Auditors considering a going concern opinion