According to Monday’s Times, the clever folks at EY have studied 20 years of company performance history. The detailed studies are available on the EY site.
Apparently a company that issues three or more profit warnings in a year has a 1 in 10 chance of going bust in a year. Or a 90% chance of not going bust – by my maths anyway.
They go on …
A company issuing those same three profit warnings has a 25% chance of losing its CEO and a 20% chance of losing its FD. Or a 75% and 80% chance of not losing them.
18% of companies who warn on profits go on to issue at least two or more warnings within a year. 88% don’t. You get the gist.
This could perhaps be summed up as
Trouble comes in threes. Except when it doesn’t. Which is more often than not.
