Many small companies listed on the Australian Stock Exchange (ASX) in the materials, energy and healthcare sectors still show alarmingly high levels of distress, according to a new survey.

When measuring by the number of companies listed on the ASX, 75 per cent were either distressed, marginally healthy or showed early warning signs of bad health, according to the Lincoln Indicators Health of the Market Report.

The number of companies in distress - the category with the worst financial health - increased by 1 per cent to 16 per cent as at June 2009, compared with December 2008.

The wide-scaled capital raisings seen over the last 18 months have not had the desired effect, Lincoln director of Stock Doctor Research Elio D'Amato said.

"The capital raisings have helped to bring the level of debt down, but it hasn't helped improve cash flows," D'Amato said.

Without good cash flows, these companies will just chew through their money and find themselves in difficulties again, he said.

Materials, energy and healthcare were especially unhealthy sectors, but this was not always the result of the global financial crisis, he said.

"A lot of junior miners are not profitable full stop," he said.

Many of these companies are in the start-up phase of their life and still require capital to continue their operations.

But most of the money invested in the stock market is concentrated in the larger companies, with the top 50 companies representing about 75 per cent of total market capitalisation.

These companies were in good shape and the survey found companies with strong financial health had even increased from 21 to 22 per cent of the total number of companies.