What is a financial decline?

A financial decline is a change in a financial situation in which a person or organization that is doing financially suddenly begins to have trouble. The logic of this particular term is that a company or person who is doing well financially can portray profits and success on the chart moving up, while the decline suggests declining finance or profits. This term can be used on a private citizen, a larger organization such as a bank or business, and much larger groups such as countries and even a global economy. A financial decline can result in another financial situation such as depression or recession. The easiest way to visualize this time period is a graph that shows time along the bottom and profits or income along the side. As a person or business is profitable, the line of the graph will move from left to right upwards, indicating profit over time. If this is no longer true and the company or person starts losing money, the line turns down to indicate a financial decline.

Although news reports often refer to a financial decline with regard to the global or national economy, it can be used on almost any scale. If someone in their work earns a large amount of money and then loses this job and cannot find a new one, then this loss of income indicates a decline in its personal finances. Similarly, the company can experience any size of a financial decline due to loss of income from damaged stocks, increased operating costs or from reduced sales.

Financial decline at national or global level often applies to large economies rather than individuals and specific enterprises. The respects can experience a decline, often because of lower revenue for the country, higher spending or other economic factors for this country that has become negative. However, businesses in this country may still be profitable and may record record financial gains because the state of a larger economic system may notI necessarily reflect all aspects of this system on a smaller scale. A financial decline often leads to a recession in which the national economy is experiencing a period of bankruptcy or an exaggerated and longer period of bankruptcy, which is often referred to as depression.