StudentShare solutions
Triangle menu
  • Home
  • Subjects
  • Finance & Accounting
  • Critically Evaluate why the Liquidity of a Firm is Considered Crucial Especially in the Growth Stage of a Company's Development

Critically Evaluate why the Liquidity of a Firm is Considered Crucial Especially in the Growth Stage of a Company's Development - Essay Example

Not dowloaded yet

Extract of sample
Critically Evaluate why the Liquidity of a Firm is Considered Crucial Especially in the Growth Stage of a Company's Development

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. Liquidity and company development - Why the liquidity of a firm is considered crucial especially in the growth stage of a company's development In order to understand the role of liquidity in the growth stage of a company development, it would be necessary to refer to the activities in which a company has to be involved during the specific phase. In accordance with Schmeisser, Clausen and Popp (2011), during its growth phase, a firm has to develop its activities covering the relevant costs; at this point, the following problem appears: the development of a company in its growth phase may be delayed due to a series of factors that cannot be easily controlled, such as the lack of capability of employees, failures in the communication of the organization with its customers or suppliers and so on (Schmeisser, Clausen and Popp, 2011). During the above period, the cash required for the completion of the firm’s projects can be increased while the profits achieved may be low, especially in the initial period of the firm’s growth. Therefore, the liquidity of the organization during the specific period may be low. In a different case, i.e. in case that the liquidity of the organization in its growth phase is high, it can be assumed that the prospects for the organization, in terms of its performance, are quite positive. Kapil (2011) notes that the level of liquidity of each organization should be periodically checked in order to ensure the status of the organization within its market. It is explained that for modern firms, liquidity reflects their ability to achieve their targets, no matter if they refer to the short or the long term. In the context of the above role, liquidity is described as an indicator of ‘the investments and assets of a firm that can be quickly converted to cash at any time or within one year’ (Kapil 2011, p.6). In the study of Arnold (2008) reference is made to the liquidity risk, which is described as the condition in which the organization is not able to retrieve the cash necessary for covering its liabilities. Moreover, Singla (2007) notes that in the growth sta ...Show more

Summary

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…
Author : nolannaomie
Critically Evaluate why the Liquidity of a Firm is Considered Crucial Especially in the Growth Stage of a Companys Development essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Critically Evaluate why the Liquidity of a Firm is Considered Crucial Especially in the Growth Stage of a Company's Development"
with a personal 20% discount.
Grab the best paper

Related Essays

Critically examine whether legal institutions matter for financial development with further implications for economic growth
Financial development of a nation is measured by taking into account certain factors like efficiency, size, access, depth, effectiveness, and security of the financial system, which comprises of institutions, markets, intermediates, resources and assets, and the various associated regulations.
20 pages (5000 words) Essay
My Psychosocial Stage of Development
The theory also offers an explanation for the issues and challenges faced by individuals, and links them to issues faced in the successful resolution of a previous conflict (Kail & Cavanaugh, 2004). This theory can be used to understand the behavior and thoughts of others as well as oneself.
3 pages (750 words) Essay
Critically Evaluate Articles in the Field of Adult Development
Although the scientific benefit of the vaccine appeared to have conquered the debate seeing that there was no solid proof that vaccination was the cause of autism or mercury poisoning due to the scare established by the debate the writer asserted the need to trust in the benefits of the vaccine left parents in the position of weighing the pros against cons of the usefulness of vaccination.
4 pages (1000 words) Essay
Critically evaluate the benefits and disadvantages of expansion via organic growth versus expansion via acquisition. using real
It is very true of the latest high trends, as per Reuters (2013, October 4), it is forcing disinterested companies to adopt “poison pill”, applied to put on hold undesired takeover -- the shareholder right plan in case an investor buys out more than 10% shares.
6 pages (1500 words) Essay
Critically evaluate information-processing accounts of cognitive development
The teachers who, by and large, bored Jean Louise Finch (the narrator of To Kill a Mockingbird) basically to death throughout her years in school must have wondered why such a bright student appeared so uninterested in her general surroundings. The ways in which
13 pages (3250 words) Essay
Critically evaluate the organisational impact of mergers and acquisitions on the enlarged tourism firm
etitive business environment which has seen a trend towards increasing price of aviation fuel has meant that businesses need to be really fit in order to achieve their growth targets. There has been a trend towards mergers and acquisitions in airlines and hotels as attempts are
10 pages (2500 words) Essay
Critically evaluate the evidence that Piaget underestimated childrens abilities in the pre-operational stage
ons with the environment, in the pre-operational stage, the child demonstrates intelligence by manipulating the symbols which represent the environment.(Salkind, 2004, pp 248). Memory and imagination develop, while the mode of thinking is primarily egocentric and occurs in a non
5 pages (1250 words) Essay
The debates over environment, population and industrial growth are unavoidably political and cultural. Critically evaluate this statement
tection seek to better human lives in future, each geared toward elimination of environment-related issues such as global warming, overgrazing, overpopulation, urbanization and even pollution (Pontin & Roderick, 2008, p.147). It is the environment that form proper catchment
6 pages (1500 words) Essay
Firm growth and M&A ; Firm Internationalisation
Once a company is in such a state, and has successfully found its way to the global market, the firm has achieved internationalization. There are purposes why companies go global, while some may find
6 pages (1500 words) Essay
Critically examine the arguments in favour of devising development policies which promote pro-poor economic growth
The Development Assistance Committee which among other things serves to alleviate poverty, issued guidelines to tackle poverty in the globe in 2001 (Ravallion 2003). The guidelines show that poverty has many interlinked dimensions and causes including: human,
6 pages (1500 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation