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Factors that Influence the Liquidity–Profitability Relationship in Companies Listed on the WSE Cover

Factors that Influence the Liquidity–Profitability Relationship in Companies Listed on the WSE

Central European Economic Journal
Volume 12 (2025): Issue 59 (January 2025)
By:   
Open Access
|Jun 2025
Figures & tables

Figures & Tables

Table 1.

The construction of portfolios based on determinants

FactorRange
Aggressive net working capital strategyCR<1
Moderate net working capital strategyCR <1;2>
Conservative net working capital strategyCR>2
High level of salesS > 1,204,375 (average value for a whole sample)
Low level of salesS < 1,204,375 (average value for a whole sample)
High level of assetsA > 2,964,799 (average value for a whole sample)
Low level of assetsA < 2,964,799 (average value for a whole sample)

[i] Source: Own study

Table 2.

Mean values for portfolios related to net working capital strategies

Aggressive strategyModerate strategyConservative strategy
No observations509650573
S1,845,8401,468,680340,971
A7,131,50015,457,106893,946
ROE−0.03030.0570.0749
ROA−0.10970.02821830.0577
CR0.58741.4157920.9465
CCC7.2225447.0722315.95

[i] Source: Own study

Table 3.

Data statistics based on the sales and asset levels

Sales < averageSales > averageAssets < averageAssets > average
No observations14672031612124
S172,4908,661,400289,86012,608,600
A360,05822,677,400338,43937,107,500
ROE0.03240.12830.03200.1266
ROA−0.00460.0375−0.00760.0474
CR8.58071.26578.11841.3483
CCC55.020921.662850.663935.7730

[i] Source: Own study

Table 4.

Correlation matrix for portfolios based on NWC management

Aggressive strategy of NWCCRCCC
ROE0.2163 ***−0.2396 ***
ROA0.3319 ***−0.2152 ***
Moderate strategy of NWCCRCCC
ROE0.0196−0.1873 ***
ROA0.1107 ***−0.1396 ***
Conservative strategy of NWCCRCCC
ROE−0.1722 ***−0.1351 ***
ROA−0.1248 ***−0.1661 ***

[i] It was assumed that the parameter was statistically significant for any p-value less than 0.1, corresponding to increasing confidence intervals of 1% (*), 5% (**), and 10% (***).

[ii] Source: Own study

Table 5.

OLS model for aggressive strategy and liquidity influencing profitability

Aggressive strategy CR<1
EndogenousConstantCCClnAAdj. R2F-statNHeteroskedasticity-corrected
ROE−0.6374 ***−0.00004 ***0.0487 ***0.079919.3458 ***423No
ROA−0.3433 ***−0.00004 ***0.0249 ***0.7777819.7838 ***469Yes
EndogenousConstantCRlnAAdj. R2F-statNHeteroskedasticity-corrected
ROE−0.8031 ***0.18320.0532 ***0.046111.6674 ***442Yes
ROA−0.2784 ***0.1671 **0.0117 *0.01595.0455 ***500Yes

[i] It was assumed that the parameter was statistically significant for any p-value less than 0.1, corresponding to increasing confidence intervals of 1% (*), 5% (**), and 10% (***).

[ii] Source: Own study

Table 6.

OLS model for moderate strategy and liquidity influencing profitability

Moderate strategy CR <1;2>
EndogenousConstantCCClnAAdj. R2F-statNHeteroskedasticity-corrected
ROE0.0151−0. 000002 ***0.00490.222290.8459 ***630Yes
ROA0.0290−0.00001 ***0.00100.075526.8555 ***634Yes
EndogenousConstantCRlnAAdj. R2F-statNHeteroskedasticity-corrected
ROE0.00290.01400.00420.00180.5951635Yes
ROA−0.05840.0469 ***0.00260.00964.1209 *640Yes

[i] It was assumed that the parameter was statistically significant for any p-value less than 0.1, corresponding to increasing confidence intervals of 1% (*), 5% (**), and 10% (***).

[ii] Source: Own study

Table 7.

OLS model for conservative NWC strategy and liquidity influencing profitability

Conservative strategy CR>2
EndogenousConstantCCClnAAdj. R2F-statNHeteroskedasticity-corrected
ROE0.00840.0000010.00760.00211.5601513Yes
ROA0.1753 ***0.000003 ***−0.0079 **0.042112.4182 ***520Yes
EndogenousConstantCRlnAAdj. R2F-statNHeteroskedasticity-corrected
ROE−0.08280.0000060.01470.00301.8209 *541Yes
ROA0.02520.00020.00350.00091.2633550Yes

[i] It was assumed that the parameter was statistically significant for any p-value less than 0.1, corresponding to increasing confidence intervals of 1% (*), 5% (**), and 10% (***).

[ii] Source: Own study

Table 8.

Correlation matrix for portfolios based on sales levels

Sales < averageCRCCC
ROE0.1386 ***−0.0748 ***
ROA0.2513 ***−0.0514 ***
Sales > averageCRCCC
ROE0.1969 ***−0.0672
ROA0.3528 ***0.0426

[i] It was assumed that the parameter was statistically significant for any p-value less than 0.1, corresponding to increasing confidence intervals of 1% (*), 5% (**), and 10% (***).

[ii] Source: Own study

Table 9.

OLS model for lower-than-average sales and liquidity influencing profitability

Sales < average
EndogenousConstantCCClnAAdj. R2F-statNHeteroskedasticity-corrected
ROE−0.0519−0.00005 ***0.00840.979933383.3 ***1365Yes
ROA−0.1053 **−0.000001 ***0.0113 ***0.86134418.782 ***1423Yes
EndogenousConstantCRlnAAdj. R2F-statNHeteroskedasticity-corrected
ROE−0.09520.0001 **0.0120 *0.00393.7423 **1372Yes
ROA−0.1668 ***0.0003 *0.0162 ***0.00857.1338 *1431Yes

[i] It was assumed that the parameter was statistically significant for any p-value less than 0.1, corresponding to increasing confidence intervals of 1% (*), 5% (**), and 10% (***).

[ii] Source: Own study

Table 10.

OLS model for higher-than-average sales levels and liquidity that influences profitability

Sales > average
EndogenousConstantCCClnAAdj. R2F-statNHeteroskedasticity-corrected
ROE0.4132−0.0004−0.01810.00811.8168201No
ROA0.06200.00006−0.00160.00590.5885201No
EndogenousConstantCRlnAAdj. R2F-statNHeteroskedasticity-corrected
ROE0.4003 *−0.0167−0.01640.00850.8506201No
ROA0.03000.0296 **−0.00190.06960.0696 **201No

[i] It was assumed that the parameter was statistically significant for any p-value less than 0.1, corresponding to increasing confidence intervals of 1% (*), 5% (**), and 10% (***).

[ii] Source: Own study

Table 11.

Correlation matrix for portfolios based on asset levels

Assets < averageCRCCC
ROE0.1195 ***−0.0754 ***
ROA0.2406 ***−0.0452 ***
Assets > averageCRCCC
ROE0.1154−0.1021
ROA0.3069 ***0.0332

[i] It was assumed that the parameter was statistically significant for any p-value less than 0.1, corresponding to increasing confidence intervals of 1% (*), 5% (**), and 10% (***).

[ii] Source: Own study

Table 12.

OLS model for lower-than-average asset levels and liquidity's influence on profitability

Assets < average
EndogenousConstantCCClnSAdj. R2F-statNHeteroskedasticity-corrected
ROE−0.2268 ***0.00004 ***0.0252 ***0.5769984.2930 ***1443Yes
ROA−0.0968 ***−0.000007 ***0.0114 ***0.096781.3111 ***1501Yes
EndogenousConstantCRlnSAdj. R2F-statNHeteroskedasticity-corrected
ROE−0.2357 ***0.0004 **0.0258 ***0.024318.9958 ***1443Yes
ROA−0.1218 ***0.0005 **0.0132 ***0.015612.8943 ***1500Yes

[i] It was assumed that the parameter was statistically significant for any p-value less than 0.1, corresponding to increasing confidence intervals of 1% (*), 5% (**), and 10% (***).

[ii] Source: Own study

Table 13.

OLS model for higher-than-average levels of assets and liquidity's influence on profitability

Assets > average
EndogenousConstantCCClnSAdj. R2F-statNHeteroskedasticity-corrected
ROE0.11120.00020.00030.01120.6802
ROA0.1006 *0.00002−0.00400.01150.6993123Yes
EndogenousConstantCRlnSAdj. R2F-statNHeteroskedasticity-corrected
ROE0.2900−0.0286−0.00810.0070.4690123No
ROA0.1972 ***0.0021−0.0100 **0.02562.6052 ^123No

[i] It was assumed that the parameter was statistically significant for any p-value less than 0.1, corresponding to increasing confidence intervals of 1% (*), 5% (**), and 10% (***).

[ii] Source: Own study

Figure 1.

The relationship between liquidity and profitability

Source: Own elaboration based on Gajdka, J. (2000). Zarządzanie finansowe: teoria i praktyka (Vol. 2). Fundacja Rozwoju Rachunkowości w Polsce, p. 467

DOI: https://doi.org/10.2478/ceej-2025-0010 | Journal eISSN: 2543-6821 | Journal ISSN: 2544-9001
Journal RSS Feed
Language: English
Page range: 157 - 170
Submitted on: Dec 21, 2024
Accepted on: Apr 28, 2025
Published on: Jun 19, 2025
Published by: Faculty of Economic Sciences, University of Warsaw
In partnership with: Paradigm Publishing Services
Keywords:
liquidity,
profitability,
factors
JEL:
G3,
M2
Related subjects:
Business and economics,
Political economics,
Economic theory, systems and structures,
Microeconomics,
Macroeconomics,
Economic policy

© 2025 Monika Bolek, published by Faculty of Economic Sciences, University of Warsaw
This work is licensed under the Creative Commons Attribution 4.0 License.

Volume 12 (2025): Issue 59 (January 2025)
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