An answer can be found in my book, "A Modern Approach to Graham and Dodd Investing," p. 89

http://www.amazon.com/Modern-Approach-Graham-Investing-Finance/dp/0471584150/ref=sr_1_1?s=books&ie=UTF8&qid=1321628992&sr=1-1

"If a company has no sustained cash flow over time, it has no value...If a company has positive cash flow but economic earnings are zero or less, it has a value less than book value and is a wasting asset. There is enough cash to pay interim dividends, bu the net present value of the dividend stream is less than book value."

A company with a stock trading below book value is believed to be "impaired," perhaps because assets are overstated. Depending on the situation, it may or may not be a bankruptcy candidate.

An answer can be found in my book, "A Modern Approach to Graham and Dodd Investing," p. 89, by yours truly.

http://www.amazon.com/Modern-Approach-Graham-Investing-Finance/dp/0471584150/ref=sr_1_1?s=books&ie=UTF8&qid=1321628992&sr=1-1

"If a company has no sustained cash flow over time, it has no value...If a company has positive cash flow but economic earnings are zero or less, it has a value less than book value and is a wasting asset. There is enough cash to pay interim dividends, but the net present value of the dividend stream is less than book value."

A company with a stock trading below book value is believed to be "impaired," perhaps because assets are overstated. Depending on the situation, it may or may not be a bankruptcy candidate.