ANALYSIS OF THE IMPACT OF LIQUIDITY ON THE PROFITABILITY IN THE MEDIUM AND LARGE MEAT PROCESSING ENTERPRISES IN THE REPUBLIC OF SERBIA
DOI:
https://doi.org/10.5937/ekoPolj2103789CKeywords:
liquidity, profitability, return on assets, processing and preserving of meat and meat products, SerbiaAbstract
Liquidity and profitability are closely related economic categories. The issue of constant balancing between liquidity and profitability, in theory known as "liquidity profitability trade off", has been the subject of significant interest of the scientific community. There is no consensus on the direction of the impact of liquidity on profitability, but the existence of this impact in practice is confirmed. The aim of this paper is to investigate the impact of liquidity on profitability, based on selected traditional financial indicators, for medium and large enterprises in the group of processing and preserving of meat and meat products of the Republic of Serbia, in the period 2016 to 2019. The findings of a multiple linear regression analysis, show that the ratio of long-term sources and fixed assets in the group of processing and preserving of meat and meat products makes a statistically significant contribution predicting the return on assets.
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References
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2. Afza, T., &Nazir, M. (2007). Working Capital Management Policies of Firms: Empirical Evidence from Pakistan, Conference Proceedings of 9th South Asian Management Forum (SAMF), North South University, Dhaka, Bangladesh 24–25 February.
3. Ahmad, R. (2016). A Study of Relationship between Liquidity and Profitability of Standard Chartered Bank Pakistan: Analysis of Financial Statement Approach. Global Journal of Management and Business Research: C Finance, 16 (1), 76-82.
4. Bagchi, B., Chakrabarti, J., & Basy Roy, P. (2012). Influence of Working Capital Management on Profitability: A Study on Indian FMCG Companies, International Journal of Business and Management, 7(22), 1-10.
5. Mohamed, B.N., & Saad, B. M. (2010): Working Capital Management: The effect of Market Valuation and Proftability in Malaysia. International Journal of Business and Management, 5(11), 140-147. doi: 10.5539/ijbm.v5n11p140.
6. Čavlin, M. (2015). Strateška analiza perfomansi preduzeća iz trgovine farmaceutskim proizvodima u Republici Srbiji primenom integrisanog sistema pokazatelјa. Megatrend revija, 12(1), 237-256. doi: 10.5937/MegRev1501237C.
7. Čavlin, M., & Tepavac, R. (2020). Mogućnost primene klasičnih bilansnih modela za prognozi solventnosti – primer MSP u ruralnim područjima Republike Srbije. U : Turizam i ruralni razvoj (str. 506-523). Univerzitet Kragujevac, Vrnjačka Banja.
8. Deloof, M. (2003). Does Working Capital Management Affect Profitability of Belgian Firms?. Journal of Business Finance and Accounting, 30 (3/4), 573-587.
9. Dencic-MIihajlov, K. (2015). Profitability during the financial crisis: evidence from the regulated capital market in Serbia. South-Eastern Europe Journal of Economics, 12(1), 7-33.
10. Ehi-Oshio O. U., Adeyemi A., & Enofe, O. A. (2013): Determinats of corporate profitability in developing economies. European Journal of Business and Management, 5 (16), 42-5.
11. Ehiedu, V. (2014). The Impact of Liquidity on Profitability of Some Selected Companies: The Financial Statement Analysis (FSA) Approach Research. Journal of Finance and Accounting, 5 (5), 81-90.
12. Eljelly, A. (2004). Liquidity – profitability tradeoff: an empirical investigation in an emerging market. International Journal of Commerce and Management, 14 (2), 48-61.
13. Garcia-Teruel., J., & Martinez-Solano, P. (2007). Effects of working capital management on SME profitability. International Journal of Managerial Finance, 3(2), 164-177.
14. Gill, A, Nahum, B, & Neil, M. (2010). The Relationship between Working Capital Management and Profitability: Evidence From The United States. Bus. Econ. J., 1-9.
15. Irawan, A., & Faturohman, T. (2015). A Study of Liquidity and Profitability Relationship: Evidence from Indonesian Capital Market. Proceedings of 31st The IIER International Conference, Bangkok, Thailand, 2nd Aug. 2015, ISBN: 978- 93-85465-65-9.
16. Jokić, M. (2020).The importance of considering internal audit as a decision-making by top-management of an agricultural company. Oditor - časopis za menadžment, finansije i pravo, 6(3), 123-136. https://doi.org/10.5937/Oditor2003123J
17. Jovanović, D., Todorović, M. & Grbić, M. (2017). Financial Indicators as Predictors of Illiquidity. Romanian Journal for Economic Forecasting, 20(1), 128-149.
18. Khidmat, W., & Rehman, M. (2014). Impact of Liquidity and Solvency on Profitability Chemical Sector of Pakistan. EMI Journal, 6 (3), 3-13.
19. Kungu, J. (2017). Effect of Liquidity Management Practices on Profitability of Manufacturing Industry in Kenya. IOSR Journal of Economics and Finance, 8 (1), 84-89.
20. Lamberg, S. & Vålming, S. (2009). Impact of Liquidity Management on Profitability a study of the adaptation of liquidity strategies in a financial crisis. Masters Dissertation. Umeå School of Business. University of Umea, Umea.
21. Levin, R., & Travis, V. (1987). Small Company Finance: What the Books Dont Say. Harvard Business Review, 65 (6), 30-32.
22. Lukic, R. (2012). Sustainable development of retail in Serbia. Revista de Management Comparat International, 13(4), 574-586.
23. Maçãs Nunes, P. Serrasqueiro, Z,. & Leitão, J.(2010). Are there nonlinear relationships between the profitability of Portuguese service SME and its specific determinants?. The Service Industries Journal, 30 (8), 1313-1341.
24. Mamić Sačer, I., Tušek, B., & Korica, I. (2013). Empirijska analiza utjecaja likvidnosti na profitabilnost hrvatskih srednjih i velikih poduzeća u grani djelatnosti informacije i komunikacije. Zbornik Ekonomskog fakulteta u Zagrebu, 11(2), 15-35.
25. Makori, D., M., & Jagongo, A. (2013). Working capital management and firm profitability: Empirical evidence from manufacturing and construction firms listed on Nairobi securities exchange, Kenya. International Journal of Accounting and Taxation , 1(1),1-14.
26. Milojević, I., Mihajlović, M., & Pantić, N. (2020). Collection and documentation of audit evidence. Oditor - časopis za menadžment, finansije i pravo, 6(2), 77-90. . https://doi.org/10.5937/Oditor2002077M
27. Mohamed K., & Hazem S. (2015). Determinants of Profitability: Evidence from Industrial Companies Listed on Muscat Securities Market. Review of European Studies, 7 (11), 303.-311.
28. Pallant, J. (2010). SPSS Survival Manual: a Step by Step Guide to Data Analysis Using SPSS. Open University Press/McGraw-Hill, Maidenhead.
29. Priya, K., & Nimalathasan, B. (2013). Liquidity Management and Profitability: A Case Study of Listed Manufacturing Companies in Sri Lanka. International Journal of Technological Exploration and Learning, 2 (4), 161-165.
30. Radić, N., Radić, V., & Stevanović, M. (2020). Economic impact of the coronavirus pandemic on the automobile industry. Oditor - časopis za menadžment, finansije i pravo, 6(3), 55-88. https://doi.org/10.5937/Oditor2003055R
31. Radović-Marković, M., & Hanić, H. (2018). Metodologija istraživanja u ekonomskim naukama. Beogradska bankarska akademija, Fakultet za bankarstvo, osiguranje i fnansije, Institut ekonomskih nauka, Beograd. ISBN 978-86-7852-038-9
32. Raykov, E. (2017). The liquidity-profitability trade-off in Bulgaria un terms of the changed financial managament function during crisis. Journal of Contremporary Managament Issues, 22(1), 135-156.
33. Rosner, B. (2011). Fundamentals of Biostatistics, 7th Edition. Brooks/Cole, Boston.
34. Saleem, Q., & Rehman R. (2011). Impacts of liquidity ratios on profitability. Interdisciplinary Journal of Research in Business , 1 (7), 95-98.
35. Saluja, P. P., & Kumar, P. P. (2012). Liquidity and Profitability Trade-off. International Journal of Advanced Research in Management and Social Sciences, 1 (3), 77-84.
36. Samiloglu, F., & Dermirgunes, K. (2008). The Effect of Working Capital Management on Firms profitability: Evidence from Turkey. The International Journal of Applied Economics and Finance, 2 (1), 44-50.
37. Smith, K, (1980). Profitability versus liquidity tradeoffs in working capital management, Readings on the management of working capital. West Publishing Company, New York, St. Paul.
38. Stevanović, S.,Minović,J.,& Marinković,G. (2021). Earnings and cash flow peristence – Case of medium agriculture enterprises in Serbia. Ekonomika poljoprivrede, 68 (1), 141-153. doi:10.5937/ekoPolj2101141S
39. Stevanović, S. Minović,J.,.& Ljumović, I. (2019). Liquidity Profitability Tradeoff: Evidence from Medium Enterprises. Management: Journal of Sustainable Business and Management Solutions in Emerging Economies, 24 (3), 71-80. ISSN 1820-0222
40. Uyar, A. (2009). The Relationship of Cash Conversion Cycle with Firm Size and Profitability: An Empirical investigation in Turkey. International Research Journal of Finance and Economics, 24, 186-193.
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Published
2021-09-25
How to Cite
Miroslav, Čavlin S., Vapa Tankosić, J., Miletić, V., & Ivaniš, M. (2021). ANALYSIS OF THE IMPACT OF LIQUIDITY ON THE PROFITABILITY IN THE MEDIUM AND LARGE MEAT PROCESSING ENTERPRISES IN THE REPUBLIC OF SERBIA. Economics of Agriculture, 68(3), 789–803. https://doi.org/10.5937/ekoPolj2103789C
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