Picking A Good Company Part II
February 16th, 2006 by jhampton
Yesterday we looked at making sure the company you invest in doesn’t have an unhealthy dependency on key suppliers.
Another warning sign of a company headed for trouble is a (two) a key dependence on key customers. When a company is dependant on one customer for a majority of their revenue and sales, it could put that company in a financial downfall if that client or customer changes their relationship with that company.
Investing in a company with this practice can put your investment at a much higher risk than normal.
If a company’s future is too closely linked to the success of a single key customer, and the company does not have control over that customer, the investor should consider this in his analysis.
It’s better to find an investment with a corporation who would not feel the punches of losing a large client. Always know your investment.
Relevant Tags: financial investing, investment coaching, personal goals, stock marketPosted on Thursday, February 16th, 2006 at 10:32 am In Stock Market Investing