If a large portion of the debt consists of short-term financing, this could indicate rollover risk. The company relies on regular refinancing, which can lead to liquidity problems in the event of deteriorating market conditions or credit terms(*).
Rollover risk is particularly problematic when there is already a high level of debt. High debt levels and high debt service costs can create default risks, potentially leading to bankruptcy.
(*) Source: Sander Lammers, Friso Scheepstra and Adam Elbourne. Een analyse van Nederlandse bedrijfsschulden. Centraal Planbureau, June 2024.
If a company's equity is negative, it means that the company's liabilities exceed its assets. This can be due to, among other things, carried forward losses or impairment losses.
This is a serious warning sign: negative equity indicates a weakened financial position. The board must assess whether the company can continue to meet its obligations in the short term (the so-called going concern assessment).
With negative equity, there is an increased risk of bankruptcy(*), as the company depends on creditor support for its continued existence.
(*) Source: results based on our own study into causes of bankruptcies.
