Financial stability is an important attribute of how your company is perceived by customers and competitors. Similarly, your company will be evaluated by others: customers, suppliers and stakeholders. All publicly traded corporations publish annual financial information; even privately held corporation can be and often are asked for their financials. The principles of managerial accounting are used to determine trends and ratios to evaluate the strength of each company’s income statement and balance sheet. Trends and "common size analysis" and ratio analysis are all used to make intra- and inter- comparisons of performance. This unit should give you a better idea about how financial stability is determined and used for any company.
Read the Chapter 13 Introduction, then click "Next Section" to read Section 13.1.