Abstract

The dairy products sector in Greece is very important for the Greek economy because it is associated to the primary sector and also has a strong exportation orientation. The impact of the financial crisis was evident in the dairy industry also along with the other sectors of the economy. The objective of this study is to examine the effect of the Cash Conversion Cycle as measure of liquidity, on the Z-scores of three selected fresh milk firms in Greece. We examine the market leader fresh milk company “DELTA”, in comparison to a new (2011) innovative firm regarding its distribution channel “THESS GALA PIES”, founded in Larissa, and to another similar sized and locality to the latter firm “TRIKKI” as representatives of the whole fresh milk/dairy products industry. On all three companies two Altman solvency prediction models are used: (a) the Altman Z?-score (1983) model revised for non – publicly traded firms, and (b) the Altman ???-score (2000) model for firms operating in emerging markets. The regression analysis of the effect of the Cash Conversion Cycle on the Z-scores of both models for all entities showed that the two aforementioned sets of data are highly associated but the hypothesis of a linear relationship between them was rejected.

Highlights

  • The dairy products sector in Greece is comprised of a large number of companies which present a considerable variability in sales, assets, market intrusion according to Stamatelos (2016)

  • The Altman (1983) model for non-public firms Z-score estimates of the aforementioned entities are presented in Table 13, below: Table 13: Altman (1983) model for non - public firms Z-score estimates for the companies “THESS GALA PIES”, “DELTA”, “TRIKKI” and the Dairy Industry5

  • The effect of the Cash Conversion Cycle on the Z-scores of three selected Greek dairy firms was examined in order to investigate the impact of liquidity to the viability of selected firms operating in the dairy sector

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Summary

Introduction

The dairy products sector in Greece is comprised of a large number of companies which present a considerable variability in sales, assets, market intrusion according to Stamatelos (2016). A huge number of small to medium sized firms fill the gaps in the local markets whilst Eurostat data shows that between 2003 and 2015 more than 90% of the firms operating in the sector produce less than 5,000 tons of milk per year. The Effect of the Cash Conversion Cycle on the Z-scores of Fresh Milk Companies in Greece. During the economic recession period the fresh milk market was suffering reduction in sales, whilst the allocation to primary production associated with the collection and transportation of the raw material entails high production cost, which is increased due to the short duration of the milk life-cycle

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