ANALYSIS OF WORKING CAPITAL MANAGEMENT OF LEADING COMPANIES IN THE HUNGARIAN DAIRY SECTOR BETWEEN 2008 AND 2012

This study analyses trends in the working capital management of those Hungarian dairy companies that feature the highest levels of sales revenues in the domestic market and diversified product structures. In view of the significance of food industry in the national economy, a particularly important question to examine in this context is to see what impacts the economic crisis has had on the business operations of the dominant companies of the sector, what processes it has triggered in working capital management. In 2012, 44 of the 500 companies with the largest amounts of sales were operating in the food processing sector. Within the group of these 44 enterprises, dairy companies had an 11% share. On the other hand, 82% of the total sales revenues of the dairy industry was given by the 15 companies where the individual amounts of registered capital are over HUF 250 million, which reflects a strong sales revenue concentration. Therefore, it has been an interesting aspect to study how in such a concentrated sector the leading companies shape their working capital management, what processes can be observed in this respect. This study has relied on the annual reports, i.e. the balance sheets and profit & loss accounts of the companies for the fiscal period of 2008–2012. The research methodology of the analysis is based on the review of financial indicators internationally accepted and used in connection with working capital management. Moreover, the study determines a cash conversion cycle, and in this context the inventory and receivables turnover, as well as the payables turnover. It has been assessed what changes the above-mentioned indicators of the competitors belonging to the target group of analysis have undergone, if there has been a general tendency of changes to be identified. For outstanding values it has been analysed what the large-scale changes could have been caused by. Fundamentally, I have aspired to reveal whether there has been any uniform tendency in the working capital management of the leading dairy companies, and if the improvement of efficiency via the regulation of working capital management is considered as a pronounced element of their corporate strategies. The closing section of this study summarises the conclusions drawn from the data of the analysis conducted, and the major characteristics of the working capital management for the leading companies of the Hungarian dairy industry with diversified product structures are highlighted