Financial Consequences Linked with Investments in Current Assets: Polish Firms Case
European Financial Systems 2013, Proceedings of the 10th International Scientific Conference, Brno: Masaryk University, 2013
12 Pages Posted: 16 Mar 2014
Date Written: 2013
Investments in financial liquidity of the firm are done thru investing money in current assets. The goal of the paper is to find if efficiency measure ROA is linked with current ratio, liquidity ratio and collection period. Paper presents a classification of financial consequences of managerial decisions in current assets investments level. There are two kinds of current assets investment influences: positive, linked with cash revenues stimulation and decreasing level of risk, and negative, linked with increasing cash expenses. Financial liquidity decisions could be considered from three perspectives: from intrinsic value of financial liquidity compared with market value of liquidity point of view, from risk sensitivity on current assets investments consequences point of view and from behavioral finance approach to financial liquidity investments point of view. The paper concerns with risk sensitivity on current assets investments consequences point of view. Discussion and classification is illustrated by empirical evidence from Polish firms data.
Keywords: current assets, financial liquidity, risk management
JEL Classification: G31, G32, G17, G02
Suggested Citation: Suggested Citation