Taking material, operational or financial under performance first, this can be indicated by three things. Firstly, long-term declines in sales and profitability, while occasional declines in sales and profitability are normal. If this happens consistently over many periods, including frequent profit warnings for public companies, then questions can be raised about how well the company is being run, whether it can compete against its peers, or even ultimately, if it still deserves to remain operating as a going concern.

Secondly, loss of key customers or contracts losing key customers or contracts means lower levels of sales, which in turn reduces the generation of cash for the company, which is detrimental in a distress situation.

Thirdly, significant costs or CapEx, overruns or delays. Expenses above expectations generate unplanned cash outflows, and therefore reduces available liquidity for the company.