Let me give you an example from one of the many schools I considered;
Oct 2007 - Net Worth - £(70,000)
Oct 2008 - Net Worth - £(125,000)
Oct 2009 - Net Worth - £(200,000)
Certainly the intentions and competency of the individuals involved are very pertinent, however if their accounts show they are losing money each year the business cannot be sustainable regardless, and therefore despite the best intentions remains high risk.
That's all very fine, and I accept that you can spot a hopeless case from such a report.
But what if each of those years showed a steady "balance sheet total" of £125K or there abouts? (I didn't use the term "Net Worth" because financial statements are not designed to give a company's net worth. The assumptions and conventions in them are not designed to show a net worth.)
Such a business could be making a profit of £500K pa, with the directors taking it all out as salary (as most small businesses in that position would do to avoid paying Corp Tax as well as Income Tax).
Or it could be the case, that the directors haven't take a salary for the past two years, the aircraft are included in inflated values, and there is little chance of the company surviving very long at all.
A good bet is much harder to find through such reports, but I accept a hopeless case is much easier to find.