IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v14y2021i15p4701-d607600.html
   My bibliography  Save this article

Application of Canonical Variate Analysis to Compare Different Groups of Food Industry Companies in Terms of Financial Liquidity and Profitability

Author

Listed:
  • Dorota Czerwińska-Kayzer

    (Department of Finance and Accounting, Poznań University of Life Sciences, Wojska Polskiego 28, 60-637 Poznań, Poland)

  • Joanna Florek

    (Department of Finance and Accounting, Poznań University of Life Sciences, Wojska Polskiego 28, 60-637 Poznań, Poland)

  • Ryszard Staniszewski

    (Department of Ecology and Environmental Protection, Poznań University of Life Sciences, Piątkowska 94C, 60-649 Poznań, Poland)

  • Dariusz Kayzer

    (Department of Mathematical and Statistical Methods, Wojska Polskiego 28, 60-637 Poznań, Poland)

Abstract

Financial liquidity and profitability are two critical phenomena present in the financial economy of a company, whose relations depend on each other and may course in different directions. At the same time, they are an example of the complexity of the problem, which demands a proper approach, allowing one to reconcile two opposing objectives of any enterprise, i.e., maximizing the benefits for the owners and minimizing the risk of losing financial liquidity. Until now, the relationship between liquidity and profitability has not been examined explicitly, using multidimensional methods in particular. Nevertheless, the links between profitability and financial liquidity maintenance ensure the sustainable development of enterprises in different branches. This paper formulates two aims: scientific and practical. The scientific one concerns adopting the canonical variate analysis method to visualize the differences and relationships between food industry companies regarding financial liquidity and profitability. The practical one relates to indicating the relationship between financial liquidity and profitability in different groups of food industry companies. To study the relationships between the selected groups of enterprises and describe them, the liquidity and profitability ratios were utilized, involving canonical variate analysis based on transformation by linear combination and singular value decomposition. The analysis found that the most important feature highlighting the group of the examined entities regarding financial liquidity was the cash conversion cycle. The research results showed the existence of multidirectional relationships between liquidity and profitability. The research indicates that they depend on indicators describing financial dependencies and the industries in which they operate. This led to a much deeper and broader interpretation of the assessment of the financial situation of companies to support their sustainable development.

Suggested Citation

  • Dorota Czerwińska-Kayzer & Joanna Florek & Ryszard Staniszewski & Dariusz Kayzer, 2021. "Application of Canonical Variate Analysis to Compare Different Groups of Food Industry Companies in Terms of Financial Liquidity and Profitability," Energies, MDPI, vol. 14(15), pages 1-16, August.
    • Handle: RePEc:gam:jeners:v:14:y:2021:i:15:p:4701-:d:607600
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/14/15/4701/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/14/15/4701/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Michał Gazdecki & Grzegorz Leszczyński & Marek Zieliński, 2021. "Food Sector as an Interactive Business World: A Framework for Research on Innovations," Energies, MDPI, vol. 14(11), pages 1-19, June.
    2. Collins, Ross D. & Selin, Noelle E. & de Weck, Olivier L. & Clark, William C., 2017. "Using inclusive wealth for policy evaluation: Application to electricity infrastructure planning in oil-exporting countries," Ecological Economics, Elsevier, vol. 133(C), pages 23-34.
    3. Grzegorz Zimon, 2020. "Financial Liquidity Management Strategies in Polish Energy Companies," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 365-368.
    4. Władysława Łuczka & Sławomir Kalinowski & Nadiia Shmygol, 2021. "Organic Farming Support Policy in a Sustainable Development Context: A Polish Case Study," Energies, MDPI, vol. 14(14), pages 1-21, July.
    5. Michał A. Jerzak & Magdalena Śmiglak-Krajewska, 2020. "Globalization of the Market for Vegetable Protein Feed and Its Impact on Sustainable Agricultural Development and Food Security in EU Countries Illustrated by the Example of Poland," Sustainability, MDPI, vol. 12(3), pages 1-13, January.
    6. Stanisław Bielski & Anna Zielińska-Chmielewska & Renata Marks-Bielska, 2021. "Use of Environmental Management Systems and Renewable Energy Sources in Selected Food Processing Enterprises in Poland," Energies, MDPI, vol. 14(11), pages 1-16, May.
    7. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3‐4), pages 573-588, April.
    8. Rufo R. Mendoza, 2015. "Financial Performance Of Micro, Small And Medium Enterprises (Msmes) In The Philippines," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 9(4), pages 67-80.
    9. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3-4), pages 573-588.
    10. Enqvist, Julius & Graham, Michael & Nikkinen, Jussi, 2014. "The impact of working capital management on firm profitability in different business cycles: Evidence from Finland," Research in International Business and Finance, Elsevier, vol. 32(C), pages 36-49.
    11. Jacek Jaworski & Leszek Czerwonka, 2021. "Determinants of Enterprises’ Capital Structure in Energy Industry: Evidence from European Union," Energies, MDPI, vol. 14(7), pages 1-21, March.
    12. Edyta Mioduchowska-Jaroszewicz, 2021. "An Analysis of External Cash Flows of Capital Groups," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 325-340.
    13. Rafal Zelazny & Jacek Pietrucha, 2017. "Measuring Innovation And Institution: The Creative Economy Index," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 12(1), pages 43-62, March.
    14. Joanna Wieprow & Agnieszka Gawlik, 2021. "The Use of Discriminant Analysis to Assess the Risk of Bankruptcy of Enterprises in Crisis Conditions Using the Example of the Tourism Sector in Poland," Risks, MDPI, vol. 9(4), pages 1-11, April.
    15. Grzegorz Zimon & Dominik Zimon, 2020. "The Impact of Purchasing Group on the Profitability of Companies Operating in the Renewable Energy Sector—The Case of Poland," Energies, MDPI, vol. 13(24), pages 1-15, December.
    16. Agnieszka Kuś & Dorota Grego-Planer, 2021. "A Model of Innovation Activity in Small Enterprises in the Context of Selected Financial Factors: The Example of the Renewable Energy Sector," Energies, MDPI, vol. 14(10), pages 1-17, May.
    17. Lejeune, Michel & Calinski, Tadeusz, 2000. "Canonical Analysis Applied to Multivariate Analysis of Variance," Journal of Multivariate Analysis, Elsevier, vol. 72(1), pages 100-119, January.
    18. Lucia Svabova & Lucia Michalkova & Marek Durica & Elvira Nica, 2020. "Business Failure Prediction for Slovak Small and Medium-Sized Companies," Sustainability, MDPI, vol. 12(11), pages 1-14, June.
    19. Collins, Ross D. & Selin, Noelle E. & de Weck, Olivier L. & Clark, William C., 2017. "Using inclusive wealth for policy evaluation: Application to electricity infrastructure planning in oil-exporting countries," Scholarly Articles 32696191, Harvard Kennedy School of Government.
    20. Krzysztof Piotr Pawłowski & Wawrzyniec Czubak & Jagoda Zmyślona, 2021. "Regional Diversity of Technical Efficiency in Agriculture as a Results of an Overinvestment: A Case Study from Poland," Energies, MDPI, vol. 14(11), pages 1-20, June.
    21. Anna Odrowaz-Coates, 2021. "Definitions of Sustainability in the Context of Gender," Sustainability, MDPI, vol. 13(12), pages 1-12, June.
    22. Ukaegbu, Ben, 2014. "The significance of working capital management in determining firm profitability: Evidence from developing economies in Africa," Research in International Business and Finance, Elsevier, vol. 31(C), pages 1-16.
    23. Azhagaiah Ramachandran & Muralidharan Janakiraman, 2009. "The Relationship between Working Capital Management Efficiency and EBIT," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 7(1), pages 61-74.
    24. Czerwińska-Kayzer, Dorota & Florek, Joanna & Kayzer, Dariusz, 2020. "Canonical Variate Analysis Applied To Determine Factors Influencing The Financial Situation Of Feed Enterprises," Roczniki (Annals), Polish Association of Agricultural Economists and Agribusiness - Stowarzyszenie Ekonomistow Rolnictwa e Agrobiznesu (SERiA), vol. 2020(2).
    25. Magdalena Cyrek & Piotr Cyrek, 2021. "Does Economic Structure Differentiate the Achievements towards Energy SDG in the EU?," Energies, MDPI, vol. 14(8), pages 1-18, April.
    26. Ekaterina Panova, 2020. "Determinants of capital structure in Russian small and medium manufacturing enterprises," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 15(2), pages 361-375, June.
    27. repec:pes:ierequ:v:11:y:2016:i:4:p:43-62 is not listed on IDEAS
    28. Tomasz Korol, 2021. "Examining Statistical Methods in Forecasting Financial Energy of Households in Poland and Taiwan," Energies, MDPI, vol. 14(7), pages 1-14, March.
    29. Maria Kovacova & Tomas Kliestik, 2017. "Logit and Probit application for the prediction of bankruptcy in Slovak companies," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 12(4), pages 775-791, December.
    30. Cheng, CSA & Liu, CS & Schaefer, TF, 1996. "Earnings permanence and the incremental information content of cash flows from operations," Journal of Accounting Research, Wiley Blackwell, vol. 34(1), pages 173-181.
    31. Angeliki Papana & Anastasia Spyridou, 2020. "Bankruptcy Prediction: The Case of the Greek Market," Forecasting, MDPI, vol. 2(4), pages 1-21, December.
    32. Sulayman H. Atieh, 2014. "Liquidity Analysis Using Cash Flow Ratios as Compared to Traditional Ratios in the Pharmaceutical Sector in Jordan," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(3), pages 146-158, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Leszek Borowiec & Marzena Kacprzak & Agnieszka Król, 2023. "Information Value of Individual and Consolidated Financial Statements for Indicative Liquidity Assessment of Polish Energy Groups in 2018–2021," Energies, MDPI, vol. 16(9), pages 1-16, April.
    2. Dorota Czerwińska-Kayzer & Tomasz Kleiber & Agnieszka Wolna-Maruwka & Przemysław Frankowski & Ryszard Staniszewski & Dariusz Kayzer, 2023. "Sustainable Use of Organic Matter Obtained from the Bottom of a Post-Mining Pit Reservoir—A Case Study on the Creation of Raduszyn Lake in Poland," Energies, MDPI, vol. 16(5), pages 1-26, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Grzegorz Zimon & Hossein Tarighi & Mahdi Salehi & Adam Sadowski, 2022. "Assessment of Financial Security of SMEs Operating in the Renewable Energy Industry during COVID-19 Pandemic," Energies, MDPI, vol. 15(24), pages 1-18, December.
    2. Shikha Bhatia & Aman Srivastava, 2016. "Working Capital Management and Firm Performance in Emerging Economies: Evidence from India," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 41(2), pages 71-87, May.
    3. Nida Shah, 2016. "The Impact of Working Capital Management on Firms Profitability in Different Business Cycles: Evidence from Pakistan," Journal of Finance and Economics Research, Geist Science, Iqra University, Faculty of Business Administration, vol. 1(1), pages 58-70, March.
    4. Tarkom, Augustine & Ujah, Nacasius U., 2023. "Global policy uncertainty and working capital management: Does national culture matter?," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    5. Abudu Braimah & Yinping Mu & Isaac Quaye & Alhassan Abubakar Ibrahim, 2021. "Working Capital Management and SMEs Profitability in Emerging Economies: The Ghanaian Case," SAGE Open, , vol. 11(1), pages 21582440219, February.
    6. Ahmed Mohamed Habib & Nahia Mourad, 2022. "Analyzing the Efficiency of Working Capital Management: a New Approach Based on DEA-Malmquist Technology," SN Operations Research Forum, Springer, vol. 3(3), pages 1-20, September.
    7. Tarek Ibrahim Eldomiaty & Mohamed Hashem Rashwan & Mohamed Bahaa El Din & Waleed Tayel, 2016. "Firm, industry and economic determinants of working capital at risk," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1-29, December.
    8. E. Louw & John H. Hall & Rudra P. Pradhan, 2022. "The Relationship Between Working Capital Management and Profitability: Evidence from South African Retail and Construction Firms," Global Business Review, International Management Institute, vol. 23(2), pages 313-333, April.
    9. Leszek Borowiec & Marzena Kacprzak & Agnieszka Król, 2023. "Information Value of Individual and Consolidated Financial Statements for Indicative Liquidity Assessment of Polish Energy Groups in 2018–2021," Energies, MDPI, vol. 16(9), pages 1-16, April.
    10. Garikai Mandipa & Athenia Bongani Sibindi, 2022. "Financial Performance and Working Capital Management Practices in the Retail Sector: Empirical Evidence from South Africa," Risks, MDPI, vol. 10(3), pages 1-17, March.
    11. Dalci, Ilhan & Ozyapici, Hasan, 2018. "Working capital management policy in health care: The effect of leverage," Health Policy, Elsevier, vol. 122(11), pages 1266-1272.
    12. Randa Mohammed Shams Addin Al-Mawsheki & Norzalina Binti Ahmad & Norhafiza Binti Nordin, 2019. "The Effects of Efficient Working Capital Management and Working Capital Policies on Firm Performance: Evidence from Malaysian Manufacturing Firms," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9(3), pages 59-69, July.
    13. SUNTRARUK Phassawan, 2023. "The Mediating Effect Of Profitability On The Relationship Between Working Capital Management And Sustainable Growth," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 18(1), pages 314-327, April.
    14. Hassan, M. Kabir & Aysan, Ahmet Faruk & Kayani, Umar Nawaz & Choudhury, Tonmoy, 2023. "Working capital as a firm performance savior? Evidence from Scandinavian countries," Research in International Business and Finance, Elsevier, vol. 65(C).
    15. Grzegorz Zimon & Hossein Tarighi, 2021. "Effects of the COVID-19 Global Crisis on the Working Capital Management Policy: Evidence from Poland," JRFM, MDPI, vol. 14(4), pages 1-17, April.
    16. Grzegorz Zimon & Dominik Zimon, 2020. "The Impact of Purchasing Group on the Profitability of Companies Operating in the Renewable Energy Sector—The Case of Poland," Energies, MDPI, vol. 13(24), pages 1-15, December.
    17. Joseph Brian Cumbie & John Donnellan, 2017. "The Impact of Working Capital Components on Firm Value in US Firms," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(8), pages 138-150, August.
    18. Dariusz Kayzer & Dorota Czerwińska-Kayzer & Joanna Florek & Ryszard Staniszewski, 2024. "Financial Security as a Basis for the Sustainable Development of Small and Medium-Sized Renewable Energy Companies—A Polish Perspective," Sustainability, MDPI, vol. 16(14), pages 1-21, July.
    19. Nasser A. Alsulayhim, 2019. "The Relationship between Working Capital Management and Profitability," International Business Research, Canadian Center of Science and Education, vol. 12(8), pages 142-152, August.
    20. Minhas Akbar & Ahsan Akbar & Muhammad Umar Draz, 2021. "Global Financial Crisis, Working Capital Management, and Firm Performance: Evidence From an Islamic Market Index," SAGE Open, , vol. 11(2), pages 21582440211, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:14:y:2021:i:15:p:4701-:d:607600. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.