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2017 | OriginalPaper | Chapter

Financial Liquidity and Profitability Management in Practice of Polish Business

Author : Katarzyna Goldmann

Published in: Financial Environment and Business Development

Publisher: Springer International Publishing

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Abstract

From the point of view of companies’ survival strategies, in the short term, financial liquidity plays a more important role than profitability does. In the case when the company is not profitable in the short term but is characterized by good financial liquidity, it has the potential for further development and for improving its performance. However, in a long-term perspective, profitability is more important because its lack in the long term will result in lacking financial liquidity. Therefore, an important element of company management is making a systematic analysis of financial liquidity and profitability, both on the basis of financial statements and on data derived from its accounts. The objective of the article is to present Polish companies’ approach to managing financial liquidity and profitability. The article presents the results of a survey made on the issue. Based on the survey, the extent of the use in making management decisions of the following was determined: liquidity ratios, working capital and the demand for working capital, analysis of the cash flow statement, and indicators of profitability. The researched entities indicated the extent of usefulness of managing receivables, liabilities, inventory, and cash in financial liquidity and profitability management.

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previous chapter The Role and Implications of Internal Audit in Corporate Governance
next chapter The Business Audit as an Alternative to Discriminant Analysis in Assessing Risks of Going Concern
Footnotes
1
In relation to the survey conducted in the first quarter of 2014 on trends in liquidity management in the case of 193 companies, the results were confirmed. As indicated by the respondents, the highest degree of usefulness in the management of liquidity had the following (in that order): cash, receivables, and payables. Then the companies considered the financial result, cash flow, inventory, total assets, and profitability ratios. However, the items that are assigned in the subject literature to the analysis of financial liquidity—the liquidity ratio, working capital, and the demand for working capital—were the last on the list. Detailed results of the research are presented in Goldmann (2014).
 
2
In relation to all of the analyzed companies, in relation to companies that calculate a given indicator or value
 
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Metadata
Title
Financial Liquidity and Profitability Management in Practice of Polish Business
Author
Katarzyna Goldmann
Copyright Year
2017
Book
Financial Environment and Business Development

Print ISBN: 978-3-319-39918-8

Electronic ISBN: 978-3-319-39919-5

Copyright Year: 2017

DOI
https://doi.org/10.1007/978-3-319-39919-5_9