Liquidity of large companies in the Republic of Serbia

Abstract

The purpose of this paper is to investigate the impact of liquidity on large companies (LC). Liquidity ratios are indicative of the company’s ability to pay its due debts and therefore are a good indicator of its current financial performance. The sample used in research consists of financial statements of 794 companies prepared for the period 20072013. During the observed period, the share of current assets in the company’s total assets recorded a decline which means that fixed assets have a faster growth rate than current assets. The results obtained indicate that managers minimize the value of supplies within the structure of current assets. Calculated values of liquidity ratio are not compliant with applicable theory which leads us to conclusion that the companies classified as large companies have poor and insufficient coverage of short-term liabilities with current assets. However, ratio shows the positive trend and the first signs of recovery of large companies in regard to liquidity. Analysis of the companies per industry shows that not all companies were equally affected by the economic crisis. Entertainment industry and craft industry are the most liquid one while the construction industry is the least liquid.