Critically Evaluate why the Liquidity of a Firm is Considered Crucial Essay

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

Corporate Social Responsibility Essay Example | Topics and Well Written Essays - 5500 words

Corporate Social Responsibility - Essay Example The paper tells that business organizations themselves realize that they owe a commitment towards the society which gives them an opportunity to establish themselves, expand their operations and finally generate profits out of their activities. In the opinion of Dahl, business enterprises are formed and sustained only as a form of a favored privilege of the Government and the society. Therefore, the social citizens will never consider the business firm as an enterprise which survives only for the purpose of making profits. The citizens through the State Government provide special rights, authorities, allowances and protections to the organizations and in return expect that the firms would undertake some activities to contribute to their well-being. Dahl emphatically declares that the existence of the business corporations is significantly dependent on the cooperation of the social citizens and therefore, enterprises have an obligation to make a positive contribution towards their liv ing conditions. Thus, firms implement various CSR functions to fulfill their commitment towards the society at large. From the definitions, it is evident that CSR refers to the relationship which the business corporations develop with the society within which they function. Authors Werther and Chandler have highlighted a unique aspect of the issue: CSR encompasses the commitment of the firms towards the society as well as the obligations of the social citizens towards the business corporations. In this context, society has been defined as an entity which encompasses all stakeholders and comprising groups that are involved in some way in the firm’s operations.... In the opinion of Dahl (1973), business enterprises are formed and sustained only as a form of a favored privilege of the Government and the society. Therefore, the social citizens will never consider the business firm as an enterprise which survives only for the purpose of making profits. The citizens through the State Government provide special rights, authorities, allowances and protections to the organizations and in return expect that the firms would undertake some activities to contribute to their well-being. Dahl emphatically declares that the existence of the business corporations is significantly dependent on the cooperation of the social citizens and therefore, enterprises have an obligation to make a positive contribution towards their living conditions. Thus, firms implement various CSR functions to fulfill their commitment towards the society at large (Banerjee, 2008 p.12). How does a firm decide on its CSR From the definitions, it is evident that CSR refers to the relat ionship which the business corporations develop with the society within which they function. Authors Werther and Chandler have highlighted a unique aspect of the issue: CSR encompasses the commitment of the firms towards the society as well as the obligations of the social citizens towards the business corporations. In this context, society has been defined as an entity which encompasses all stakeholders and comprising groups that are involved in some way in the firm’s operations. The stakeholders of a corporate organization include the â€Å"consumers, employees, suppliers, creditors and supervising authorities. The local community citizens and the environment agents are also considered as the