The impact of funding sources on corporate liquidity in energy sector in the Czech Republic

Abstract

The aim of this paper is to determine the impact of funding sources on liquidity of companies in energy sector in the Czech Republic. With the purpose to fulfill the aim, we examine existence and character of relationship between selected financial factors (debt equity ratio, share of capital for consideration to total assets, return on equity, share of fixed assets to total assets, share of earnings before interest and taxes to total assets, equity ratio) and liquidity of the companies in energy sector in the Czech Republic. The existence of relationship between financial factors and liquidity of companies is tested by correlation analysis and generalized method of moments called GMM method. It is expected a positive relationship between liquidity and funding sources in energy sectors in the Czech Republic. Companies with high liquidity are more credible and less risky clients for creditors and can obtain the necessary financial support under more favorable and cheaper terms.