STAGES OF

SICKNESS
Presented by Esha jaiswal (19315)
 Meaning
Industrial sickness usually refers to a situation
when an industrial firm performs poorly,incurs
losses for several years and often defaults in its
debt repayment obligations.
A sick industrial unit may be defined as when it
fails to generate surplus on a continuous basis and
depends on frequent infusion of external funds for
its survival
Stages of sickness
1. stage I (Normal/healthy)
2. Stage II(Tending towards
sickness)
3. Stage III (Incipient
sickness)
4. Stage IV (Death)
 Stages I
Healthy Unit:

A healthy unit is one where all the systems and sub-systems, and all the functional
areas like finance, production, marketing and personnel, are performing efficiently.
That is, when a unit is earning sufficient profit, when its current ratio is more than
one, when its tangible net worth is positive, and when its debt-equity ratio is
reasonable, it may be termed as healthy.
Further, a healthy unit must also be capable of withstanding the ever-changing
external environment, as the antibodies in a healthy human being fight the viral or
bacterial infection.
 STAGE II

Tending towards sickness :

When certain aberrations start taking place in any of the functional
areas of a unit, due to some internal problems or external
(environmental) constraints, it may be said to be tending towards
sickness. The indicators at this stage may be decline in the profit last
year as compared to the previous year and the estimated losses in
the current year.
 Stage III
Incipient sickness :
If the initial aberrations are not arrested in time,
the position may deteriorate and the actual sickness may set in.
Due to the following factors: 1.cash losses incurred in last year
are expected in current year also. 2. Deterioration anticipated in
current year although current year ratio was more than 1 during
last year 3.The debt-equity ratio of the unit was expected to
deteriorate during the current financial year.
Stage IV Death or closure :

When the company or unit continues to

accumulate cash losses for a period of several
years in the past, its manufacturing processes
have stopped, and it has no access to finances,
its revival is just not possible. This is the final
stage of closure or death of a unit.
Conclusion
To conclude , the sick units may be attempted to
be turn around through efficient management
and to learn about the stages of sickness
Thank you