Successful Or Distress

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.

 

 

Sample Solution

Following every bankruptcy, a company’s investors, suppliers, customers, and employees invariably ask themselves: “Could we have seen it coming? Could we have predicted that the company was in big trouble? Were there distress signs that we missed?” Often, the answer is yes. There are many warning signs present when a company is in distress, and most can be found in its financial statements. Sustained periods of negative cash flows (cash outflows exceed cash inflows) can indicate a company is in financial distress. The debt-to-equity ratio compares a company’s debt to shareholders’ equity and is a good measure in assessing a company’s debt default risk.

and wasn’t even the only death that year. After Piazza sustained his injuries, it took members of the frat over 40 minutes to decide what to do, which many attribute to the bystander effect as well as groupthink. In many cases like these, the members of the fraternity know what they are doing – engaging in violent and excessive hazing – is wrong. Many of these members not only feel sympathy, but even empathy due to the fact they went through the same ritualistic hazing. Fear of standing out against the group causes these people not to say anything. Everyone wants to fit in, and that leads people to do weird things.

 

 

Groupthink is a societal phenomenon unlike any other. This tendency occurs when the desire for harmony within a group leads to irrational behavior. These “irrational behaviors” include ignoring their sympathies or empathies to victims to fit in with the crowd. There have been many cases of people ignoring others being murdered, raped, or otherwise assaulted due to the “bystander effect”, a result of groupthink. Such examples of this include Ilan Halimi, a French Jew kidnapped in Paris and Shanda Sharer who was kidnapped by four teenage girls. Irving Janis proposed about eight symptoms of groupthink, one of which being: Unquestioned belief in the morality of the group, causing members to ignore the consequences of their actions. This nicely ties into the big discussion of “bad morality versus sympathy” as this unquestioned belief in the morality of their group – whatever it may be – becomes “bad” by the unwillingness to question it. Groupthink has been applied to cases such as the fraternity hazing but also what led the Nazi’s to invade the Soviet Union, and is how we get scandals such as Watergate. It also leads to centuries long oppression, through slavery or other forms of degradation.“Bad morality” is any morality that requires you to ignore your natural sympathies to others in order for it to survive.We find good morals to be based in sympathy, in the way we handle

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