 LIQUIDITY OF THE SPLIT-DALMATIAN COUNTY’S ECONOMYIvo Sorić
Ekonomski pregled, 2004, vol. 55, issue 7-8, 557-579 Abstract: The indicators of liquidity have become crucial indicators in the management of liquid assets. In the fi rm‘s business the top goal is the increase of the fi rm‘s value due to capital profit of the owner‘s equity, and the liquidity is the goal which makes it possible. The maintenance of the liquidity and the total liquidity consciousness means that the financial manager can with certainty attest that the assets are at disposal when they are needed, that he can forecast the cash fl ow, as well as to ensure sources in case of urgent and unexpected needs. With the purpose of the cash optimisation on the account as well as the control of the firm‘s liquidity status, the managers, who are the bearers of the decisions using three levels of the liquidity measures, must make up business decisions. The management of the liquid assets is based upon the permanent qualification of the current asset‘s quality, i.e. its optimal quantity and structure. By analysing the liquidity measures the need for the rational way of decisions is imposed in the circular way of creating the obligations, the payments of debts and the settlements of the payment at maturity. The rational way of making decisions includes making decisions in the phases. It consists of making diagnosis of the problem, recognizing posibilities, determining of the alternatives with the limits in the alternative decisions, and finally the evaluation and the choice of the alternative i. e. decision making. Moreover, by analysing the measures of liquidity as the rational way of business decisions, we can quantify the alternative advantages and disadvantages of the achieved quantity of each individual form of assets with the direct infl uence on the fi nancial business results. At the end, the only act of payment of debts towards the suppliers is the result of the rational way of business decisions done in multi-phases. At the same time together with the act of payment of debt, the transformation of the general liquidity measures appears with the partial cash fl ow conception into the exact liquidity measure with the total cash flow conception. Only when these business cycles are continually in proces we can say that the fi rm‘s asset is circulating in the reproductive process with both the quantity and dynamics planned. The analysis of business operations in the Split-Dalmatian county proved that the decision making process in the management of liquid assets by phases, resulted in lower levels of the liquidity rates than those of the Croatian economy. The analysis of business decisions through the evaluation of the current assets has revealed deficiencies in the management of the liquid assets, what has fi nally resulted in less realised incomes than possible. Keywords: liquidity; –; liquidity; ratios; -; quality; of; current; assets; -; economical; way; of; decision; making; process; -; total; revenue (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hde:epregl:v:55:y:2004:i:7-8:p:557-579 Ordering information: This journal article can be ordered from Access Statistics for this article Ekonomski pregled is currently edited by Josip Tica More articles in Ekonomski pregled from Hrvatsko društvo ekonomista (Croatian Society of Economists) Contact information at EDIRC. |
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