Non Profit Organization Liquid Assets Strategies
21 Pages Posted: 28 Aug 2011
Date Written: August 26, 2011
In dependence of kind of realized mission, sensitivity on risk, which is a result of decision about liquid assets investment level and liquid assets financing. The kind of organization influence the best strategy choice. If an exposition on risk is greater, the higher level of inventories, accounts receivable and operating cash should be. If the exposition on that risk is smaller, the more aggressive will be the net liquid assets strategy and smaller level of inventories. The organization choosing between various solutions in liquid assets needs to decide what level of risk is acceptable for her owners and capital suppliers. That choice results with financing consequences, especially in cost level. It is a basis for considerations about relations between risk and expected benefits from the liquid assets decision and its results on financing costs for both nonprofit or for profit organizations. The paper shows how in authors opinion decisions about liquid assets management strategy and choice between kind of taxed or non-taxed form inflow the risk of the organizations and its economical results during realization of main mission. Comparing the theoretical model with empirical data for 1000 Polish nonprofit organization results, suggest that nonprofit organization managing teams choose higher risky aggressive liquid assets solutions than for-profit organizations.
Keywords: short-run financial management, financial liquidity, liquid assets
JEL Classification: G31, L31, M21
Suggested Citation: Suggested Citation