What are Zombie Companies? [Video]

This video is all about what is a zombie company, reasons for zombification, how to revive zombie companies, and their impact on the economy.

What is a zombie company?
A zombie company is a corporate unit having very little cash flow that is enough to pay the interest on the debt borrowed but does not have enough money to repay the principal amount of the loan. Primarily because the revenue generated by the business operations covers only the fixed routine and operating costs.

Causes for Zombification?
– An Unexpected drop in an economy
– Availability of loans with very low-interest rates
– Poor use of resources

Effects of a zombie company on the economy
– Reduces the overall productivity.
– Curb’s the growth of the country.
– Eats up useful resources.

How to revive a zombie company?
– Procure new funding from non-zombie companies.
– Directors guarantee certificate
– Selling all the existing assets
– Can raise finance for each sale invoice they provide

For more details, you can refer to our article –
https://www.wallstreetmojo.com/zombie-company/

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