Crisis Caused Changes in Intrinsic Liquidity Value in Non-profit Institutions


  • Grzegorz Michalski Wroclaw University of Economics



intrinsic liquidity value, non-profit financial management, financial liquidity


Liquid assets which non-profit institutions hold are not a source of any special interests and although the close to cash assets together with credit lines available for non-profit institution are connected with resigning from realizing a part of income or costs, non-profit institutions decide to hold some liquidity reserves. This results not only from transactional needs, but also from precautional and speculative reasons. Investment in liquid reserves resulting from speculative demand for money may be assessed by usage of capital budgeting methods. In the paper, each of these aspects of liquidity was taken into consideration and presented from non-profit perspective. Non-profit liquidity value determination may often significantly contribute to the solution of working capital management problems in these institutions.


Download data is not yet available.


Baumol W.J., (1952) The Transactions Demand for Cash: An Inventory Theoretic Approach, Quarterly Journal of Economics?, nr 66, listopad 1952, pp. 545-556.
Beck P.E. (1993), The Option Value of Money, Working Paper nr 93-15, November, Department of Economics, University of Delaware.
Beck P.E., D.R. Stockman (2005), Money as Real Options in a Cash-in-Advance Economy, Economics Letters, 2005, vol. 87, pp. 337-345.
Beranek W. (1963), Analysis for Financial Decisions, R. D. IRWIN, Homewood 1963.
Berger P. (2008), Fundamentals of Health Care Financial Management, Wiley, New York 2008, pp. 46-47.
Bougheas P., Mateut P., Mizen, P. (2009), Corporate trade credit and inventories: New evidence of a trade-off from accounts payable and receivable, Journal of Banking & Finance, vol. 33, no. 2, 2009, pp. 300-307.
Brigham E.F. (2006), Fiancial Management 11e, (last visit: April 2011).
Brigham E.F., Gapenski L.C. (2000), Zarządzanie finansami, PWE, Warszawa, 2000, pp. 524-536.
Cote J.M., C.K. Latham, (1999), The Merchandising Ratio: A Comprehensive Measure of Working Capital Strategy, Issues in Accounting Education, vol. 14, no. 2, May 1999, pp. 255-267.
Emery G.W., (1988), Positive Theories of Trade Credit, Advances in Working Capital Management, JAI Press, vol. 1, 1988, pp. 115-130.
Fabozzi F.J., (1999), Investment Management, Prentice Hall, Upper Saddle River 1999.
Fernandez P., (2008), Market Risk Premium Used in 2008 by Professors: A Survey with 1,400 Answers (April 16, 2009). Available at SSRN:
Fernandez P., Aguirreamalloa J., Avenda?o L.C., (2011), Market Risk Premium Used in 56 Countries in 2011: A Survey with 6,014 Answers (April 25, 2011). Available at SSRN:
Fernandez P., Del Campo B.J., (2010), Market Risk Premium Used in 2010 by Professors: A Survey with 1,500 Answers (May 13, 2010). Available at SSRN:
Gallinger G., A. J. Ifflander, (1986), Monitoring Accounts Receivable Using Variance Analysis Financial Management, zima 1986, 69-76.
Graber P.J., Assets, (1948), The Accounting Review, vol. 23, no. 1, Jan. 1948, p. 12-16.
Henderson J.W., T. P. Maness (1989), The financial analyst's deskbook: A Cash flow approach to liquidity, Van Nostrand Reinhold, New York
Hill N.C., W. L. Sartoris (1995), Short-Term Financial Management. Text and Casep., Prentice Hall, Englewood Cliffp.
Holmstrom B., J. Tirole, (2001), LAPM: a liquidity-based asset pricing model, Journal of Finance, 2001, vol. 56, p. 1837-1867 {WP6673, National Bureau of Economic Research, Cambridge, 1998}.
Jaworski J., (2010), Teoria i praktyka zarządzania finansami przedsiębiorstw, CeDeWu, Warszawa 2010, ISBN:9788375562262, p. 362, 364, 366, 367, 369, 371, 372, 385, 496.
Khoury N.T., K.V. Smith, P.I. MacKay, (1999), Comparing Working Capital Practices in Canada, the United States and Australia, Revue Canadienne des Sciences de l?Administration, vol. 16, no. 1, Mar. 1999, pp. 53-57.
Kim C-P., D. C. Mauer, A. E. Sherman (1998), The Determinants of Corporate Liquidity: Theory and Evidence, Journal of Financial and Quantitative Analysis, vol. 33, nr 3, september.
Kim Y.H., J. C. Atkins, (1978), Evaluating Investments in Accounts Receivable: A Wealth Maximizing Framework, Journal of Finance, vol. 33, nr 2, 1978, pp. 403-412.
Lane G.P., Longstreth E., Nixon V., (2001), A Community Leaders Guide to Hospital Finance, The Access project, Suite 2001, pp. 1-17.
Lee C.F., J. E. Finnerty (1990), Corporate finance. Theory, method and applicationp. HBJ Publishers, San Diego.
Levy H., D. Gunthorpe, (1999), Introduction do Investments, South-Western College Publishing, Cincinnati 1999.
Lofthouse P., (2005), Investment Management, Wiley, Chichester 2005.
Lyn E. O., G. J. Papaioannou, (1996), Liquidity and the Financing Policy of the Firm: an Empirical Test, Advances in Capital Management, Londyn 1996, vol. 3, pp. 65-83.
McMenamin J. (1999), Financial Management ? an introduction, Routledge, London.
Merton R.C, A.F. Perold, (1999), Theory of Risk Capital in Financial Firms, in: D.H. Chew, The New Corporate Finance. Where Theory Meets Practice, McGraw-Hill, Boston 1999.
Michalski G., (2004), Leksykon zarządzania finansami, C.H. Beck, Warszawa 2004.
Michalski G., (2010), Strategiczne zarządzanie płynnością finansową w przedsiębiorstwie, CeDeWu, Warszawa 2010, ISBN: 978-83-7556-167-8, p. 88.
Michalski G., (2011), Operating cycle and non-profit institutions efficiency, Journal of academic research in economics, 3 (3), 2011, ISSN 2066-0855, pp. 584-598.
Michalski G., (2011b), Influence of the post-crisis situation on cost of capital and intrinsic liquidity value in non-profit organizations, International journal of management and social sciences (IJMSS), vol. 1 (1), pp. 67-78.
Michalski G., (2011c), Efektywność inwestycji w zapasy w opodatkowanych i nieopodatkowanych organizacjach, [w:] Zarządzanie finansami. Inwestycje, wycena przedsiębiorstw, zarządzanie wartością, D. Zarzecki [red.], Zeszyty Naukowe, Uniwersytet Szczeciński nr 639, Szczecin.
Michalski G., (2012), Poziom zaangażowania kapitału w zapasach w organizacjach non-profit, Zeszyty naukowe Uniwersytetu Szczecińskiego nr 690, Finanse, rynki finansowe, ubezpieczenia nr 51, Zarządzanie finansami: inwestycje, wycena przedsiębiorstw, zarządzanie wartością, D. Zarzecki [red.], pp. 203-209.
Miller M.H., D. Orr, (1966), A Model of the Demand for Money by Firms, Quarterly Journal of Economics, 1966, nr 80, pp. 413-435.
Miller T. W., B. K. Stone, (1996), The Value of Short-Term Cash Flow Forecasting Systems, Advances in Working Capital Management, JAI Press Inc., Londyn 1996, vol. 3, pp. 3-63.
Mueller F.W., (1953), Corporate Working Capital and Liquidity, The Journal of Business of the University of Chicago, vol. 26, no. 3, Jul. 1953, p. 157-172.
Myers P. C., R. G. Rajan, (1998), The Paradox of Liquidity, Quarterly Journal of Economics 113, nr 3, Cambridge, 1998, pp. 733-771.
Nita B., Syntetyczny wskaźnik płynności finansowej w ujęciu statycznym w kontekście zapotrzebowania na kapitał obrotowy netto, [w:] Rachunek kosztów i pomiar dokonań, E. Nowak, M. Nieplowicz [red.], Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu nr 182, Wrocław, ISSN: 1899-3192, pp. 364-374.
Nowicki M., (2004), The Financial Management of Hospitals and Healthcare Organizations, Health Administration Press, New York 2004., p. 29
Opler T., R. Stulz, R. Williamson, (1999), The determinants and implications of corporate cash holdings, Journal of Financial Economics, vol. 52, no. 1, 1999, pp. 3-46.
Orlicky J., (1975), Material Requirements Planning, McGraw-Hill, New York 1975.
Parrino R., D.P. Kidwell, (2008), Fundamentals of Corporate Finance, Wiley, New York 2008.
Peterson R., E.A. Silver, (1979), Decision Systems for Inventory Management and Production Planning, Wiley, New York 1979.
Plossl G.W., (1985), Production and Inventory Control, Principles and Techniques, Prentice Hall, Englewood Cliffs 1985.
Poteshman A., R. Parrino, M. Weisbach, (2005), Measuring Investment Distortions when Risk-Averse Managers Decide Whether to Undertake Risky Project, Financial Management, vol. 34, Spring 2005, pp. 21-60.
Puxty A. G., J. C. Dodds (1992), Financial Management Method and Meaning., Chapman and Hall, London.
Rast B., (2000), Household Liquidity ? Why You Need It, Business & Economic Review, Januarz ? March.
Reilly F.K., (1992), Investments, The Dryden Press, Fort Worth 1992.
Rzeczycka A., (2006), Zarządzanie środkami pieniężnymi w przedsiębiorstwie (in): Zarządzanie Finansami Przedsiębiorstwa, G. Golawska-Witkowska, A.Rzeczycka, H.Zalewski, OW Branta, Bydgoszcz 2006, ISBN:9788360186428, pp. 144,340.
Scherr F.C. (1989), Modern Working Capital Management. Text and Casep., Prentice Hall, Englewood Cliffp.
Stone B. K., (1972), The Use of Forecasts and Smoothing in Control - Limit Models for Cash Management, Financial Management, 1972, pp. 72-84.
Tobin J., (1958), Liquidity Preference as Behavior Toward Risk, Review of Economic Studies, 1958 r. nr 25, pp. 65-86.
Washam J., D. Davis (1998), Evaluating Corporate Liquidity, TMA Journal, March / April, vol. 18, nr 2.
Zietlow J., (2010), Non-profit financial objectives and financial responses to a tough economy, Journal of Corporate Treasury Management, vol.3, nr 3., May 2010, Henry Steward Publications, ISSN1753-2574, pp. 238-248.
Zietlow J., J.A.Hankin, A.G.Seidner, (2007), Financial Management for Non-profit Institutions, Wiley, NewYork, 2007, pp. 6-7;




How to Cite

Michalski, G. (2012). Crisis Caused Changes in Intrinsic Liquidity Value in Non-profit Institutions. Equilibrium. Quarterly Journal of Economics and Economic Policy, 7(2), 139–158.



Financial markets and finance management