Liquidity or Profitability: Financial Effectivness of Investments in Working Capital

INTERNATIONAL FINANCIAL SYSTEMS, P. Cervinek, ed., BRNO, 2008

14 Pages Posted: 11 Nov 2008 Last revised: 3 Jan 2009

See all articles by Grzegorz Michalski

Grzegorz Michalski

Uniwersytet Ekonomiczny we Wrocławiu - Faculty of Engineering and Economics

Date Written: June 25, 2008

Abstract

The basic financial purpose of corporation is creation of its value. Liquidity management should also contribute to realization of this fundamental aim. Many of the current asset management models that are found in financial management literature assume book profit maximization as the basic financial purpose. These book profit-based models could be lacking in what relates to another aim (i.e., maximization of enterprise value). The corporate value maximization strategy is executed with a focus on risk and uncertainty. This article presents the discussion about relations between firm's net working investment policy and firms value.

Keywords: corporate value, investments, current assets, working capital, value based management

JEL Classification: D81

Suggested Citation

Michalski, Grzegorz, Liquidity or Profitability: Financial Effectivness of Investments in Working Capital (June 25, 2008). INTERNATIONAL FINANCIAL SYSTEMS, P. Cervinek, ed., BRNO, 2008. Available at SSRN: https://ssrn.com/abstract=1299586

Grzegorz Michalski (Contact Author)

Uniwersytet Ekonomiczny we Wrocławiu - Faculty of Engineering and Economics ( email )

ul. Komandorska 118-120
Wroclaw, 53-345
Poland

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