Why would management manipulate solvency ratios and explain.

Accounting
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Why would management manipulate solvency ratios and explain.

Dec 3rd, 2014

solvency ratios indicate whether an organization is in a position to meet both its short term and long term liabilities.they indicate the financial position of the organization.The management would manipulate solvency ratios for their own benefits. The compensation of the executives of an organization is dependent upon the financial performance of the organization. It, therefore, compels the management to paint a rosy picture of the financial performance of the organization. This will ensure that the financial performance expectations are met thus shore up their personal compensation.

 


Dec 3rd, 2014

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Dec 3rd, 2014
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