Food Processing Industry Enterprises Risk Sensitivity & Efficient Financial Liquidity Decisions: The Case of Krajowa Spółka Cukrowa S.A.

Posted: 13 Aug 2012

See all articles by Grzegorz Michalski

Grzegorz Michalski

Uniwersytet Ekonomiczny we Wrocławiu - Faculty of Engineering and Economics

Date Written: December 12, 2011

Abstract

General economic situation influence enterprise ability to generate value for its owners depending on kind of business and individual enterprise flexibility and risk sensitivity. Enterprise financial liquidity management can reduce risk influence on enterprise results. Food processing industry from one side have not a comfort of stable demand on its production and is strongly linked with volatility of realized incomes and also very often face the seasonal delivery of raw materials for it production. The paper presents the consequences that can result from operating risk that is related to liquidity policy in the context of food processing industry firms. An increase in the level of liquid assets in an enterprise increases both net working capital requirements and the costs of holding and managing financial liquidity. Both of these decrease the value of the firm. But not always it works in the same way, it depends on risk sensitivity of the business which differ between branches and individual representatives from each branch. Case study data presents and is an material for discussion about general model presented in first part of the paper. The relation between liquid levels and risk sensitivity is also illustrated by empirical data from food processing industry empirical data.

Suggested Citation

Michalski, Grzegorz, Food Processing Industry Enterprises Risk Sensitivity & Efficient Financial Liquidity Decisions: The Case of Krajowa Spółka Cukrowa S.A. (December 12, 2011). Available at SSRN: https://ssrn.com/abstract=2128303

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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