As companies in China gradually restart business following the extended Lunar New Year break, investors are fretting over the financial impact of the coronavirus outbreak that has squeezed cash flow and hammered revenues in many sectors.
The flu-like epidemic has killed nearly 3,000 people and infected more than 80,000 across the country.
Reuters analyzed balance sheets of nearly 4,000 listed Chinese companies to see how well they are financially prepared to cope with the impact.
A look at days of cash on hand, which estimates how long a business can run daily operations without additional revenue, showed that the airline industry is most vulnerable with just 48 days of cash on hand as of end-September, down from 72 days a year earlier.
Carriers faced immense pressure in the first quarter as the outbreak escalated, as many airlines were forced to cancel thousands of flights and put some staff on leave due to broadening domestic and global travel restrictions.
Debt to equity ratio also increased, with airlines again showing the highest leverage of 1.78 times versus 1.27 times a year earlier, followed by construction and engineering sector which had 1.70.
The average debt to equity ratio of all surveyed companies worsened to 0.95 from 0.87. The food and staples sector showed the healthiest multiple of 0.52 times, although it also deteriorated from 0.28.
"We believe that in general the small businesses will continue to struggle, while the larger enterprises and SOE should hold up relatively better," said Caroline Yu Maurer, head of Greater China Equities at BNP Paribas Asset Management.
"The downstream players in various industries may suffer a bit more, given the supply chain disruption as well as the lack of labour force in the short term given the constraint on labour flow."
Total cash held by the surveyed companies increased by 8.5 per cent, but the mobile communications sector saw the sharpest decline of 25%, followed by air freight and logistics industry, which showed a 17.6 per cent drop.
In a move to save cash, some companies including online car dealers Uxin Ltd and Chehaoduo, which is backed by SoftBank's Vision Fund, are cutting staff salaries.
China also eased fund raising rules last month to help ease cash strains caused by the virus. Listed companies including Bank of Ningbo and battery maker CATL has since queued up to raise more than $10 billion.
Inventory turnover, which measures how many times a company has sold and replaced inventory, worsened to 2.65 from 2.72, with automobiles sector showing 9.42 versus 10.7 a year earlier.
China's vehicle sales likely fell by almost a fifth in January, marking a 19th consecutive month of decline, and are set to drop deeper in February, hit by extended production halt and store shutdowns amid travel restricitons.
Recent surveys showed a third of the country's smaller companies said have only enough cash to last for a month in the event of prolonged business disruptions, with another third believing they can hold out for two months.
China's services sector had its worst month on record in February as new orders plummeted to their lowest level since the global financial crisis, a PMI business survey showed on Wednesday, with economists urging swift government support to avoid mass bankruptcies.