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

Figure 1.

Correlation matrix for portfolios based on asset levels

Assets < average	CR	CCC
ROE	0.1195 ***	−0.0754 ***
ROA	0.2406 ***	−0.0452 ***

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

Sales < average
Endogenous	Constant	CCC	lnA	Adj. R2	F-stat	N	Heteroskedasticity-corrected
ROE	−0.0519	−0.00005 ***	0.0084	0.9799	33383.3 ***	1365	Yes
ROA	−0.1053 **	−0.000001 ***	0.0113 ***	0.8613	4418.782 ***	1423	Yes

Correlation matrix for portfolios based on sales levels

Sales < average	CR	CCC
ROE	0.1386 ***	−0.0748 ***
ROA	0.2513 ***	−0.0514 ***

Correlation matrix for portfolios based on NWC management

Aggressive strategy of NWC	CR	CCC
ROE	0.2163 ***	−0.2396 ***
ROA	0.3319 ***	−0.2152 ***
Moderate strategy of NWC	CR	CCC
ROE	0.0196	−0.1873 ***
ROA	0.1107 ***	−0.1396 ***
Conservative strategy of NWC	CR	CCC
ROE	−0.1722 ***	−0.1351 ***
ROA	−0.1248 ***	−0.1661 ***

OLS model for moderate strategy and liquidity influencing profitability

Moderate strategy CR <1;2>
Endogenous	Constant	CCC	lnA	Adj. R2	F-stat	N	Heteroskedasticity-corrected
ROE	0.0151	−0. 000002 ***	0.0049	0.2222	90.8459 ***	630	Yes
ROA	0.0290	−0.00001 ***	0.0010	0.0755	26.8555 ***	634	Yes

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

Assets > average
Endogenous	Constant	CCC	lnS	Adj. R2	F-stat	N	Heteroskedasticity-corrected
ROE	0.1112	0.0002	0.0003	0.0112	0.6802
ROA	0.1006 *	0.00002	−0.0040	0.0115	0.6993	123	Yes

Data statistics based on the sales and asset levels

	Sales < average	Sales > average	Assets < average	Assets > average
No observations	1467	203	1612	124
S	172,490	8,661,400	289,860	12,608,600
A	360,058	22,677,400	338,439	37,107,500
ROE	0.0324	0.1283	0.0320	0.1266
ROA	−0.0046	0.0375	−0.0076	0.0474
CR	8.5807	1.2657	8.1184	1.3483
CCC	55.0209	21.6628	50.6639	35.7730

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

Assets < average
Endogenous	Constant	CCC	lnS	Adj. R2	F-stat	N	Heteroskedasticity-corrected
ROE	−0.2268 ***	0.00004 ***	0.0252 ***	0.5769	984.2930 ***	1443	Yes
ROA	−0.0968 ***	−0.000007 ***	0.0114 ***	0.0967	81.3111 ***	1501	Yes

OLS model for aggressive strategy and liquidity influencing profitability

Aggressive strategy CR<1
Endogenous	Constant	CCC	lnA	Adj. R2	F-stat	N	Heteroskedasticity-corrected
ROE	−0.6374 ***	−0.00004 ***	0.0487 ***	0.0799	19.3458 ***	423	No
ROA	−0.3433 ***	−0.00004 ***	0.0249 ***	0.7777	819.7838 ***	469	Yes

The construction of portfolios based on determinants

Factor	Range
Aggressive net working capital strategy	CR<1
Moderate net working capital strategy	CR <1;2>
Conservative net working capital strategy	CR>2
High level of sales	S > 1,204,375 (average value for a whole sample)
Low level of sales	S < 1,204,375 (average value for a whole sample)
High level of assets	A > 2,964,799 (average value for a whole sample)
Low level of assets	A < 2,964,799 (average value for a whole sample)

OLS model for conservative NWC strategy and liquidity influencing profitability

Conservative strategy CR>2
Endogenous	Constant	CCC	lnA	Adj. R2	F-stat	N	Heteroskedasticity-corrected
ROE	0.0084	0.000001	0.0076	0.0021	1.5601	513	Yes
ROA	0.1753 ***	0.000003 ***	−0.0079 **	0.0421	12.4182 ***	520	Yes

Mean values for portfolios related to net working capital strategies

	Aggressive strategy	Moderate strategy	Conservative strategy
No observations	509	650	573
S	1,845,840	1,468,680	340,971
A	7,131,500	15,457,106	893,946
ROE	−0.0303	0.057	0.0749
ROA	−0.1097	0.0282183	0.0577
CR	0.5874	1.41579	20.9465
CCC	7.2225	447.072	2315.95

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

Sales > average
Endogenous	Constant	CCC	lnA	Adj. R2	F-stat	N	Heteroskedasticity-corrected
ROE	0.4132	−0.0004	−0.0181	0.0081	1.8168	201	No
ROA	0.0620	0.00006	−0.0016	0.0059	0.5885	201	No