Working capital in Estonian agricultural companies: analysis by size

The paper examines the working capital indicators to find out the differences between larger and smaller Estonian agricultural companies. In the task of working capital management, a balance between profitability and liquidity is under investigation. A higher level of current assets ensures higher liquidity, but reduces the profitability. The share of inventories in current assets is relatively high in agricultural companies, and can lead to liquidity problems in adverse circumstances. Low levels of current assets can lead to business interruptions, as insufficient stocks lead to delays in the production process, which in turn is amplified in yields or other outputs. The number of employees is used to distinguish the size of the company. The results show that the smallest agricultural companies have higher liquidity and relatively larger share of highly liquid current assets. Larger agricultural companies maintain a higher level of inventory and have a longer inventory turnover period. Smaller companies have a slightly higher share of loans in current liabilities, so they have to maintain a larger financial buffer. The cash conversion cycle is longer for the smallest and the largest agricultural companies while medium-sized companies have a shorter cash conversion cycle. Smaller companies have the longest receivables turnover, showing that they enable longer payment periods for buyers or may have difficulties collecting receivables from the production sold. Having low market power and long receivables turnover, they have relatively higher need for working capital.