Some 60,000 businesses fail every year, but more than four times that number are in trouble at any given time. A prosperous economy often masks problems, particularly in middle-market companies. During these times, creditors and lenders are more tolerant of marginal performance.

Problems with the core enterprise are most evident, and easier to predict, if efforts are made to benchmark the debtor against others in the industry. This is not as difficult as it sounds. Both industry and company data are widely available through various public sources, including the Department of Commerce, Robert Morris Associates, 10-K filings, etc.

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