Is your company in trouble?

It’s vital to keep up with your stock holdings regularly. This can help you notice if a company seems headed for trouble. If things get really bad, it might even file for bankruptcy protection, which is generally a disaster for shareholders, causing them to lose most or all of their investments. Here are some red flags to look out for.

If a company has taken on a lot of debt and is close to not being able to meet its obligations, that’s a big worry. Many companies make good use of borrowed money to fuel growth, but they should have enough cash coming in to cover debt repayments. You might spot growing debt and shrinking cash on a company’s financial statements — or you might read that the company is trying to restructure its debt, or that it might miss an interest payment.

On a company’s income statements, if you see revenue (sometimes referred to as sales) declining, that’s a concern — as is shrinking income (or widening losses). Ideally, a company’s revenue and income will both be growing. There may be periods without growth, but if so, keep an eye on the situation. If revenue is declining while debt is growing, that’s a major red flag.

A dividend being reduced, suspended or eliminated can also be a red flag, as it means the company needs that cash for something else, even though it had planned to pay it to shareholders. Companies seldom take such actions unless they must.

Major changes in leadership, especially sudden ones, can be a sign of trouble, too — though sometimes new leaders can turn the business around, making it prosper again.

If you see any worrisome signs from a company in which you’re invested or are thinking of investing, take time to dig deeper. You’ll need to find out if its troubles seem temporary or lasting — and whether it seems to deserve your continued investment. If it’s no longer among your most promising stocks, move that money into an investment that you like better.