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Critically Evaluate why the Liquidity of a Firm is Considered Crucial Especially in the Growth Stage of a Company's Development. - Essay Example
Finance & Accounting
Pages 9 (2259 words)
Critically evaluate why the liquidity of a firm is considered crucial especially in the growth stage of a company's development. How would the strategic changes in financial statements influence the value creation process? 1. Introduction The measurement of the value of modern organizations is developed using a range of strategies; managers in these organizations have to choose that strategy which is more feasible, in terms of existing conditions in the internal and the external organizational environment…
Current paper focuses on a particular aspect of organizational performance: liquidity, a term used in order to show the potentials of an organization to meet its liabilities. Emphasis is given on the significance of liquidity in the growth stage of the company development. At the same time, efforts are made in order to identify the terms under which the changes in the financial statement of a particular organization can influence the organization’s value creation process. The literature published in regard to these issues has been reviewed and evaluated; it is made clear that the role of liquidity in the growth stage of the company development can be differentiated. As of the changes on a firm’s financial statements, these seem as unavoidable especially under the following terms: the value creation process of each organization is based on specific organizational data; changes on the particular data could influence the validity of the assumptions made in regard to the economic status of the organization and its power within its industry. 2. ...
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