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Liquidity and Profitability of Meat Processing Enterprises in Poland

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  • Szymańska, Elżbieta
  • Lukoszová, Xenie

Abstract

The research aimed to identify changes in the level of liquidity and profitability of meat industry enterprises and determine the relationship between liquidity and profitability in this industry. The authors made a hypothesis that there is a positive relationship between the liquidity and profitability of meat enterprises, which means that along with the increase in financial liquidity the profitability of enterprises increased. The research used information from meat processing and preservation companies, except poultry, employing more than nine persons. The analysis covered companies that were obliged to submit financial statements to the National Court Register. In 2007, there were 467 such enterprises in Poland and 316 in 2018. The descriptive statistics, Pearson correlation coefficient, and linear regression analysis were used in the data analysis. The analyses show that the number of meat businesses in Poland is decreasing as a result of their consolidation and winding-up due to the difficult financial situation. The average current liquidity ratio of the enterprises analyzed between 2007 and 2018 remained at a satisfactory level from 1.054 to 1.49. The research shows a significant correlation between current and quick liquidity ratios and returns on assets and equity. The highest level of correlation occurred between the quick liquidity ratio and the asset profitability ratio. The profitability of meat enterprises in the long term is associated with maintaining financial liquidity. In turn, maintaining the ability to meet current obligations requires a rational management of profit and working capital.

Suggested Citation

  • Szymańska, Elżbieta & Lukoszová, Xenie, 2021. "Liquidity and Profitability of Meat Processing Enterprises in Poland," Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej 319814, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    • Handle: RePEc:ags:iafepa:319814
    DOI: 10.22004/ag.econ.319814
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    References listed on IDEAS

    as
    1. Greg Filbeck & Thomas M. Krueger, 2005. "An Analysis of Working Capital Management Results Across Industries," American Journal of Business, Emerald Group Publishing, vol. 20(2), pages 11-20.
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    3. Chisti Khalid Ashraf, 2012. "The Relationship between Working Capital Efficiency and Profitability," Advances In Management, Advances in Management, vol. 5(12), December.
    4. Chisti Khalid ASHRAF, 2012. "The relationship between working capital efficiency and profitability," The Journal of Accounting and Management, Danubius University of Galati, issue 3, pages 21-45, December.
    5. Andrea Gamba & Alexander Triantis, 2008. "The Value of Financial Flexibility," Journal of Finance, American Finance Association, vol. 63(5), pages 2263-2296, October.
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    Keywords

    Agricultural and Food Policy; Demand and Price Analysis; Farm Management;
    All these keywords.

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