41% of Russell 2000 companies now have negative earnings This number is up more than 2x since 2006
And is comparable to levels seen during the peak of 2008 Financial Crisis
....and if the company can't produce earnings when the economy is still relatively strong, they would be in big trouble when the economy turns sour and especially if they have high debt levels.
....most of the time heavily indebted companies are at the mercy of their bankers in troubled times, and even their strong management cannot save them.
....though most of these companies prefer debt to raising capital as they (management) don't want to dilute their own holdings and send stock prices lower which would hurt their stock compensations...but having less to no debt buys these companies more time for an eventual economic recovery.
....hence big risk with capital intensive resource companies facing headwinds with declining commodity prices. And when recession hits, its almost assured that commodity prices would be sinking.
