Financial resilience
A company’s ability to absorb economic shocks without threatening its solvency or continuity of operations. It is measured by available liquidity, equity strength, revenue diversification, and cost-structure flexibility.
In practice
Financial resilience is built during good times, not in crisis. Companies that maintain a cash buffer equivalent to 3 to 6 months of fixed costs, avoid over-dependence on a single client or product, and keep a debt/EBITDA ratio below 3 navigate downturns with options that more leveraged competitors lack. The Covid crisis illustrated this: financially sound companies were able to acquire distressed competitors at reduced prices while those competitors fought for survival.