Operating Cycle and Nonprofit Organizations Efficiency

Journal of Academic Research in Economics, Volume 3, Number 3, November 2011

16 Pages Posted: 26 Dec 2012

See all articles by Grzegorz Michalski

Grzegorz Michalski

Uniwersytet Ekonomiczny we Wrocławiu - Faculty of Engineering and Economics

Date Written: December 25, 2012

Abstract

Depending on the kind of realized mission, sensitivity to risk, which is a result of the decision about liquid assets investment level, NPOs should choose that level and resulting from it, the liquid assets financing. The kind of organization influences the best strategy choice. The organization choosing between various solutions in liquid assets needs to decide what level of risk is acceptable for its owners and capital suppliers. That choice results with financing consequences, especially at 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 profit organizations. The paper shows how, in author’s opinion, decisions about liquid assets management strategy and choice between the kind of taxed or non-taxed form, inflow the risk of the organizations and its economical results during the realization of its main mission. Comparing the theoretical model withn empirical data for 1000 Polish nonprofit organization results, we suggest that nonprofit organization managing teams choose higher risky aggressive liquid assets solutions than for-profit organizations.

Keywords: liquidity value, short-run financial management, financial liquidity, liquid assets, working capital

JEL Classification: E32, L20, O16

Suggested Citation

Michalski, Grzegorz, Operating Cycle and Nonprofit Organizations Efficiency (December 25, 2012). Journal of Academic Research in Economics, Volume 3, Number 3, November 2011. Available at SSRN: https://ssrn.com/abstract=2193715

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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