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More Than Half of US Companies Are Under Financial or Operational Stress and 14% Are in Distress as Pandemic’s Economic Impact Deepens

More Than Half of US Companies Are Under Financial or Operational Stress and 14% Are in Distress as Pandemic's Economic Impact Deepens

New Research by BCG Shows Scope of Crisis and Pinpoints Trouble Spots by Region and Sector

More than seven months into the novel coronavirus pandemic, a disturbingly large number of US companies are at risk, according to new research from Boston Consulting Group (BCG) confirming that economic distress is deeply entrenched and shows no sign of letting up.

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More than 60% of US companies analyzed are under financial or operational stress as of the end of the second quarter of 2020, a 49% increase from the end of the second quarter of 2019, according to BCG analysis. And 14% are in distress—either challenged to meet their financial obligations or under operational pressure that requires significant restructuring. That represents a 43% increase over the previous year. The lack of additional government stimulus puts many of these companies at risk.

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Those are among the most significant findings from the BCG TURN Radar index. The index, developed by BCG TURN, BCG’s special transformation, turnaround, and restructuring unit, tracks a company’s distress based on over 20 key performance indicators in three categories: financial, market, and qualitative. The Radar index reports on over 25,000 publicly-traded companies, with more than $100 million in revenue, across 80 countries and 20 industry sectors. There were 721 US companies tracked for distress. A company is measured against its peers, its industry, and the overall sample, and its score places it in one of three groups—either stable, stressed (underperforming in its industry or under internal or external pressure), or distressed.

The US picture is bleak, but not the worst on a global basis—in Central Europe, the Middle East, and Africa, the number of companies in distress has gone up 83%.

Overall, the BCG TURN Radar index portrays the US and global economy struggling as the pandemic maintains its grip.

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