As you can see when you buy shares in a company you are the LAST priority if the company you are buying goes broke. We are shareholders though are the only ones that actually OWN the company and therefore as long as loans and taxes are paid we are entitled to ALL profits beyond that. So if we know that companies have the least chance of going broke we will never have to worry about losing any profit in the companies we own in the long run. One of the most important things too look is the quick and current ratios of a company. They should be above 2 at least if you want to be safe in your investments. The higher the current and quick ratios are the easier it will be for the company to PAY on debt especially immediate debt. You must also understand that company efficiency per employee is important. If you take the income of a company and divide it by the number of employees you can see how much on average an employee is generating for your company. Companies that are more efficient with a less chance of going broke and paying their creditors is a company that has efficient employees and management compared to their competition. We are seeing this with car companies now because if car companies can’t make good use out of their employees or they cost too much then they run the risk of going broke and leaving you the stockholder behind. The bondholders have absolute priority.