Naslov
Financial position and performance - two opposing criteria?

Autori
Brozović, Mateja ; Sever Mališ, Sanja ; Žager, Lajoš

Vrsta, podvrsta i kategorija rada
Radovi u zbornicima skupova, cjeloviti rad (in extenso), znanstveni

Izvornik
Zbornik radova RED 2020 - 9th International Scientific Symposium "Region, Entrepreneurship, Development" / Leko Šimić, Mirna ; Crnković, Boris - Osijek : Ekonomski fakultet Sveučilišta Josipa Jurja Strossmayera u Osijeku, 2020, 886-901

Skup
9th International Scientific Symposium Region, Entrepreneurship, Development 2020 (RED 2020)

Mjesto i datum
Osijek, Hrvatska, 04.06.2020. - 05.06.2020

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
financial position, performance, liquidity, profitability, financial indicators

Sažetak
Companies must achieve an appropriate balance between the adequate business security and a reasonable performance that will satisfy the interests of the owners. In terms of business security or financial position, it is essential to maintain a certain level of liquidity for the company to be able to pay its obligations. Higher level of liquid assets usually means that the company is less likely to have issues with repaying its short-term liabilities. However, the question is: can a company be too much liquid, i.e. can a high liquidity have negative consequences on the performance? According to the previous research, the relationship between liquidity and profitability can go both ways. In theory, a low liquidity may lead to increasing financial costs if a company is not capable to meet its obligations. On the other hand, some researchers claim that money invested in short- term assets generates less return than long- term assets, which means that holding high levels of short-term assets represents an opportunity cost, in addition to the fact that short-term assets require maintenance and therefore further reduce the profitability of the company. The aim of our paper is to systematize the results of the previous research in this field. Additionally, we are aimed to investigate the direction and strength of connection between liquidity and profitability indicators on a sample of non- financial companies in Croatia. According to the research conducted on 851 companies in the period 2008-2017, the correlation between current liquidity and RAO/ROE in the short run in usually negative, but not statistically significant. In the long-run, correlation for most companies is again not statistically significant. However, for those companies that experienced significant correlation, the correlation is primarily positive. The hypothesis that financial position or safety and financial performance are two opposed criteria cannot be accepted.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA