Financial stability and financial condition of the firm The concept and the kinds


As is evident in the preceding paragraph, an accountant is inundated with a plethora of information from a variety of sources. It is difficult to make an

informed choice without systematically organizing this information (the manager will simply not know what issues to address first). Thus, the

systematization and generalization of information as well as its reduction to generalized categories is essential for the management of information. To

aid in internal financial management, a generalized categories are the company’s financial status. The definition of any generalized classification will

be as follows: through the efforts of a variety of researchers, experts and professionals an entire set of standards of conduct are developed for it:What

information, in what amount, and in the level of accuracy required;What are the states of a qualitative nature for the category in question;what, with

the assistance of which coefficients indicators,. can be used to establish the status of this classification for a specific object; how to evaluate and

interpret the conditions of this category with respect to the particular objectwhat actions should take in instance of a specific state (or to obtain either

one or the other state).



For managers to make informed and efficient decisions, they need to learn and apply the knowledge and experience of other

managers.These generalized categories are found across a variety of fields of work. For instance, in the field of medical practice, it’s the state of health

of a patient.Similar to medical practices, in addition to conventional treatments, alternative treatments are also feasible with no less beneficial results,

and could even enhance the science of all (we do not talk about charlatans rather, pioneers who are pushing science forward) In financial

management , it’s possible to take financial decisions based on factors that are different from the norms.The management of non-traditional methods

is largely depend on each individual. Therefore, in this text we will only consider the conventional method of justifying decisions. This approach in

financial management is dependent upon an examination of financial conditions. There are two potential uses of financial condition in the stage of

decision justifying:The decision to be taken is to manage the financial situation (e.g. getting out of the crisis, etc. );the choice to make is not directly

connected to the financial situation However, it is essential to evaluate how it could impact the financial situation.To understand how to make use of

information regarding the financial situation to justify the management decision, it’s important to first know what the financial health of the

company.The financial condition is a key aspect that lets you determine how trustworthy the business is on the market.

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