Assignment 2: Health Financial Management Week 6
The organization’s ability to meet its financial obligations as they come due will depend on a variety of factors. An organization should have adequate cash flow in order to meet ongoing costs and pay off debts. They may find it difficult to timely pay and stay solvent if they have less revenue than their obligations and costs.
To avoid further straining their finances, they should assess whether available credit lines have the capacity to pay for any cashflow shortfalls.
In addition, the organization should use liquidity ratios like the current ratio & quick ratio (which measure a company’s ability to pay off its debts in time) as well as other relevant metrics such as net present value calculations etc., when making decisions related to managing their finances going forward.
Overall, it is important for the organization to maintain healthy liquid reserves in order to properly fulfill its financial obligations as they come due – thereby mitigating risk & ensuring long-term sustainability if needed.