What could a financial manager look

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Reference no: EM133752736

Question: What could a financial manager look at to determine whether his company is successful or in distress? Give an example of a success or distress in today's business world.

The financial manager must assess whether the company's assets exceed its liabilities and determine if the company's solvency is sufficient to cover its debts. The evaluation provides insight into the company's future financial stability. If the company's assets are able to cover all liabilities, the financial manager will determine that the company has adequate solvency. However, if liabilities outweigh assets, the financial manager will conclude that the company is facing solvency issues.

Amazon, for example, has been consistently generating earnings to meet its debt obligations and maintain a steady income stream. This positions the company strongly to manage its debt and avoid financial distress. As previously posted in Frank Umoera's post Amazons 2022 current ration is 1.12 showing a strong liquidity position. (Amazon, 2022) Over the last 10 years Amazon has maintained a current ration average of 1.06, which anything over 1 means they are exceeding their debts in assets.

Reference no: EM133752736

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