COMPETITIVENESS ANALYSIS OF LEADING COMPANIES
IN HUNGARIAN DAIRY INDUSTRY BY LIQUIDITY
INDICATORS
Rózsa And ea
Uni e si y o Deb ecen, Cen e o Ag icul u al and Applied Economic Sciences
Facul y o Applied Economics and Ru al De elopmen
Ins i u e o Accoun ing and Finance
Tálas Do isz
Uni e si y o Deb ecen, Cen e o Ag icul u al and Applied Economic Sciences
Facul y o Applied Economics and Ru al De elopmen
Ins i u e o Accoun ing and Finance
In his s udy, on he basis o he accoun ing da a o he las ew yea s, we analyse he change o
compe i i eness he Hunga ian dai y companies which ha e he la ges e enues. In 2010, 5
en e p ises o he 50 ood indus ial ones ha ing he la ges e enues we e wo king in he dai y
sec o . This concen a ed compe i i e en i onmen o e s easons o he compa a i e e iew o
he sho e m liquidi y ac o s as he mos impo an indica o s o emaining in he compe i ion
o ma ke su i al.
Fo he esea ch we use he balance shee s, income s a emen s and cash low s a emen s om he
inancial epo s conce ning 2008-2009-2010 economical pe iods. The esea ch me hods o ou
analysis a e based on he in e na ionally accep ed and applied sys em o inancial indica o s.
This s udy includes he analysis o he liquidi y a ios coming om he balance shee and he cash
low s a emen as well as he analysis o he cash cycle which indica es he e ec i eness o he
cu en asse s managemen .
We examine he change o he liquidi y posi ion o compe i o s belonging o he selec ed g oup
du ing he economic c isis. We o m company o de s on he basis o he e enues, he liquidi y
indica o s, he capi al s uc u e indica o s, he inancial s eng h and he cash con e sion cycle.
Basically, we sea ch he answe s o he ollowing ques ions:
- Which company’s ma ke posi ion is he s onges on he g ounds o liquidi y ac o s?
- Which company can be conside ed as ma ke leade by i s compe i i eness?
- Is he e any connec ion be ween he alue o endency o he change o he e enues and he
liquidi y si ua ion o he analysed companies calcula ed on he basis o he abo e men ioned
inancial indica o s?
Finally, we summa ise ou conclusions conce ning he mos impo an liquidi y ea u es o he
leading Hunga ian dai y indus ial companies. Compa a i e sec o analyses on na ional o
Eu opean le el may ill a gap, because only a ew p o essional pape s ha e appea ed in his
subjec . In ou opinion, his kind o s udies has ou s anding impo ance in he ield o applied
economics, business economics and p ac ical economic li e as well; consequen ly, ou esul s can
be used by companies immedia ely.
Ou analysis can be widened, and simila esea ches can be accomplished o di e en egions
o di e en sec o s. This s udy is also con enien o he in e na ional popula iza ion o
compe i i eness analysis om inancial poin o iew.
Keywo ds: compe i i eness, inancial analysis, liquidi y, dai y indus y, Hunga y
JEL Classi ica ion Codes: M21, L66
In oduc ion
In ou s udy we se he aim o analyse he compe i i eness o leading companies in Hunga ian
dai y indus y by liquidi y. Choosing he dai y sec o can be jus i ied by i s na ional economical
impo ance, e y s ong ma ke compe i ion, and po en ial analy ical cu iosi ies.
Dai y sec o is a pa o ood indus y, and ood indus y belongs o p ocessing indus y, and
p ocessing indus y is an impo an pa o ag icul u al sec o in a wide sense. Ag icul u al sec o
is also impo an in espec o he ou pu , he g oss domes ic p oduc and he employmen . In he
las wo e ms he p ocessing–dis ibu ing–ca e ing sec o s ep esen mo e han 50%. Beyond i s
na ional economic p opo ion, ood indus y is an impo an sec o on he basis o public
expenses as well. In he las ew yea s 20-25% o he o al public expenses was spen on ood and
non-alcoholic be e ages; mo eo e , he expo p opo ion o ag icul u al and ood indus ial
p oduc s is also signi ican , 6,0-6,5% (Ko ács 2010: 466-478). Wi hin he ood indus y he
impo ance o milk p ocessing and he economical cha ac e is ics o milk p ocessing companies
can be analysed as well. The concen a ion o dai y indus ial companies is ela i ely high in
compa ison o he ac ha he e a e many o hem on he ma ke . The ba gaining powe o
p ocessing companies is s ong opposi e o he manu ac u e s, and mos o he companies aim o
enla ge i s e enues. The companies hink ha i is possible o enla ge hei e enues me ely
h ough e ec i e u iliza ion o capaci ies, wi hou me ge s and acquisi ions. Mo eo e , he
companies make an e o o educe hei cos s, and o enla ge he p oduc ion o he p oduc s wi h
highe p ocessing s age. These Hunga ian en e p ises a e backwa d in he ield o inno a ion and
in es men willingness in compa ison wi h hei o eign compe i o s. One eason o his is, ha
he bigge companies en us he p oduc de elopmen no o he na ional subsidia y companies,
and he smalle companies a e no enough capi al-in ensi e o he de elopmen s. The o he
eason is ha he e is no demand o new p oduc s o highe p ice, because he consume s a e
p ice-sensi i e (Popp, Po o i and Papp 2010: 81-91).
The deg ee o he concen a ion o he Hunga ian dai y indus y and he size o he compe i ion
on he ma ke can be well demons a ed on he basis o ou sample used in his s udy. Acco ding
o he “Op en” company in o ma ion da abase he e a e 147 companies in Hunga y now, whose
main ac i i y is „p oducing dai y p oduc s”. Wi hin he companies only 23 ha e mo e han 100
million HUF capi al s ock alue, and only 15 companies (10% o he whole sample) ha e mo e
han 250 million HUF capi al s ock. On he basis o he capi al s ock and he e enues in 2010 i
can be s a ed ha he o al e enues o he p e ious 15 companies is 170 billion HUF, and he
summa ized e enues o he 5 leading companies acco ding o he e enues exceed he 75% o
he 170 million HUF. Consequen ly, he high ma ke concen a ion can be conside ed as e i ied,
and he analysis o he s ong compe i ion si ua ion in ol ed by he concen a ion is jus i ied. The
sample o ou esea ch is his g oup o 5 leading companies.
The economic c isis in luences i s o all he e enue, he p o i and he liquidi y h ough he
dec easing demand. In his s udy we analyse he change o liquidi y o selec ed 5 leading
companies du ing he c isis, and de e mine which company has he s onges compe i i e
posi ion.
Li e a u e e iew and esea ch me hodology
The long e m inancial goal o all companies is he con inuous inc ease o he i m’s alue and
he maximiza ion o he sha eholde ’s weal h. The p ima y condi ion o i is a s able and
sus ainable liquidi y. Du ing he c isis, he con inuous con ol o liquidi y indica o s is especially
impo an in o de o escape he bank up cy si ua ion (B ealey and Mye s 2003: 24-27; Gi man
2002: 14-16).
The basic me hodology o he indi idual and compa a i e analysis is he sys em o inancial
indica o s (Damoda an 2002: 26-57; Bodie, Kane and Ma cus 2002: 606-620). In his s udy, we
apply hose names, inancial con en s and e alua ion poin o iews o he inancial a ios which
a e cus oma y in in e na ional li e a u e (Gi man 2002: 54-61).
Mo eo e , we emphasize he impo ance o Hunga ian simila s udies (Pi i 2010a: 2-23; Pi i
2010b: 29-44) and p o essional books which i in wi h his subjec (Ka i s 2002: 76-92; Bélyácz
2006: 60-68).
The ollowing able demons a es he companies in ol ed in his analysis as well as hei
e enues, and he e ec s o he economic c isis on he change o he e enues.
Table 1: The a ge g oup o he analysis (da a in 1000 HUF)
Name
o he company
Re enues
2008
Re enues
2009
Re enues
2010
A e age
e enues
SoleMizo (SM)
43 144 733
37 849 216
37 247 841
39 413 930
F iesland (F)
36 499 660
28 930 657
29 416 093
31 615 470
Danone (D)
30 425 582
28 173 745
28 976 262
29 191 863
Tolna ej (T)
15 948 401
15 695 535
17 046 245
16 563 394
Kő ös ej (K)
40 487 619
12 083 687
15 527 873
22 699 726
Sou ce: made by he au ho
He ea e we enume a e he selec ed liquidi y indica o s in ol ed in o ou analy ical ame (Table
2). We also gi e easons o choosing hese a ios.
Table 2: The analy ic ame o he esea ch
Financial
indica o s
A e age alues o 2008-2010
Values in 2010
SM
F
D
T
K
SM
F
D
T
K
Quick a io
Deb - o-asse a io
Deb epaymen
s eng h (yea )
Cash cycle (day)
Sou ce: made by he au ho
Among he sho e m liquidi y indica o s based on balance shee da a we chose he quick a io o
elimina e he possible dis o ional e ec o in en o ies. F om he long e m liquidi y indica o s
based on balance shee da a we p e e he deb - o-asse a io because he o he capi al s uc u e
indica o s (deb - o-equi y and o al asse s/equi y) can be de e mined by using his a e. We de ine
deb as he sum o sho and long e m liabili ies.
A e he s a ic analysis conce ning one da e we change o e o dynamic analysis based on cash
low s a emen conce ning a pe iod. Supposing ha he cu en ope a ing cash low emains
cons an in he ollowing yea s, he deb epaymen s eng h exp esses how many yea s a e
necessa y o epaymen o all liabili ies (Ka i s 2002: 90); and i s calcula ion is: 1/ (deb /
ope a ing cash low).
The cash con e sion cycle e e s o he ac ha he i m needs inancial sou ces o manage he
ime di e ences po en ially occu in he logis ical p ocesses. Consequen ly, cash cycle indica es
he pe iod be ween he i m’s ope a ing cycle and u no e o accoun s payable in days
(Banomyong 2005: 30), and i s calcula ion is: in en o y u no e in days + accoun s ecei able
u no e in days – accoun s payable u no e in days.
On he basis o he accomplished calcula ions we c ea e company o de s acco ding o he a e age
alues o 2008-2010, and o he alues in 2010 as well. Based on company o de s we o mula e
ou conclusions conce ning compe i i eness.
The esul s o he esea ch
In his pa , as a esul o ou esea ch, we p esen he alues calcula ed on he basis o annual
epo da a conce ning he yea s 2008, 2009, and 2010. On he basis o he alues, we c ea e
company o de s, and, acco ding o hese wo iewpoin s, we e alua e he compe i i eness o
companies wi hin he sec o .
Table 3: The alues o he selec ed a ios
Financial
indica o s
A e age alues 2008-2010
Values in 2010
SM
F
D
T
K
SM
F
D
T
K
Quick a io
0,97
2,65
0,55
2,87
0,98
0,67
2,44
0,62
2,7
1,1
Deb - o-asse a io
0,78
0,69
0,68
0,20
0,57
0,87
0,89
0,73
0,22
0,56
Deb epaymen
s eng h (yea )
16
31
7
2
NV
34
66
8
2
NV
Cash cycle (day)
-
-
-
-
-
26
35
17
34
49
Sou ce: made by he au ho
We illus a e company o de s wi h he help o ables. We lis ed he i ms acco ding o hei
a e age alues o he pe iod 2008-2010 and o he alues in 2010, espec i ely (Tables 4 and 5).
The numbe s show he ad ance om he mos a ou able alue (1) o he less a ou able one (5)
o e e y indica o . In he case o he quick a io he bigge alue e e s o he be e compe i i e
posi ion, i.e. bigge pa o he sho e m liabili ies (o e en i s mul iple alues) is co e ed by he
alue o he cu en asse s educed by he in en o ies. In he cases o deb - o-asse , deb
epaymen s eng h and cash con e sion cycle he si ua ion is e e sed: he smalle alues
indica e he be e compe i i e posi ion, i.e. he smalle he indica o alue, he be e he liquidi y
s a us o he company.
Table 4: The company o de s o he pe iod 2008-2010
Financial indica o s
company o de s
based on a e age alues
1
2
3
4
5
Quick a io
T
F
K
SM
D
Deb - o-asse a io
T
K
D
F
SM
Deb epaymen s eng h (yea )
T
D
SM
F
K
Cash cycle (day)
↓
↓
↓
↓
↓
Sou ce: made by he au ho
Table 5: The company o de s o he yea 2010
Financial indica o s
company o de s
based on alues in 2010
1
2
3
4
5
Quick a io
T
F
K
SM
D
Deb - o-asse a io
T
K
D
SM
F
Deb epaymen s eng h (yea )
T
D
SM
F
K
Cash cycle (day)
D
SM
T
F
K
Sou ce: made by he au ho
By e alua ing he change o company o de s, an in e es ing cha ac e is ic can be no iced, namely,
he company o de s based on he a e age alues o 2008-2010 as well as on he alues in 2010
a e almos he same. E alua ing he indica o s sepa a ely, i can be s a ed ha we can di ided he
companies in o wo g oups acco ding o hei quick a ios: i ms wi h accep able and wi h less
a ou able (below 1,00) alues. In he i s g oup he alues dec ease (SM, F, T), while in he
second g oup hey inc ease (D, K), which can also be poin ed ou by he ela ion o he a e age
alues and he da a in 2010. Quick a io da a o SoleMizo and Danone become o be c i ical in
2010.
The cha ac e is ic change o he 3 yea s ime se ies o deb / o al asse s is he inc ease; he only
excep ion is Kő ös ej, which was able o dec ease a bi his indica o . In he case o he h ee
companies o he la ges e enues he alue is o e 70%, which de ini ely indica es inancing
p oblems. In he case o SoleMizo and F iesland, beside he un a ou able capi al s uc u e, he
inc easing amoun o loss also weakens hei compe i i eness.
Changes o deb epaymen s eng h indica o show no endency: he e a e big changes e en
wi hin he companies in he pe iod o 2008-2010. Tolna ej has a ou able and s able alues.
Danone no malized he alue o his indica o , and, in his way, compensa ed he un a ou able
alues based on balance shee . In he case o SoleMizo and F iesland he alues o his ca ego y,
simila ly o he o me ones, a e wo se and wo se, and he alues in 2010 a e c i ical. Conce ning
Kő ös ej we applied ‘NV’ o sign ha indica o has no inancial con en because he alue would
be -46 o 2010 due o he nega i e alue o ope a ing cash low. The e o e, we did no calcula e
a e age alue, because he nega i e ope a ing cash low i sel indica es a e y un a ou able
liquidi y posi ion.
Because o he calcula ion me hod, we ha e cash con e sion cycle da a only o 2009 and 2010,
he e o e we did no es ima e a e age alues in his case, bu we ma ked only he inc ease (↑) o
he dec ease (↓). E e y en e p ise dec eased i s cash cycle, which was a necessa y equi emen
because o he gene al inc ease o deb - o-asse a io. Rega ding he cash cycle alues in 2010 he
i ms show no la ge di e ences, al hough Danone and Kő ös ej di e a bi om he mean o he
sample, which is 32 days. In he case o Danone his alue sugges s ha he i m makes he
necessa y e o s o imp o e i s sho e m liquidi y posi ion.
Conclusions
In ou s udy we se he aim o analyse he compe i i eness o he leading Hunga ian dai y
indus ial companies based on liquidi y indica o s. We jus i ied he indus ial concen a ion and
he s ong compe i ion, and accomplished he compa a i e analysis o he selec ed 5 companies
based on in e na ionally applied liquidi y indica o s, c ea ing ou analy ical ame. On he basis
o he o de s c ea ed om he calcula ed alues he ollowing conclusion can be o mula ed:
- The liquidi y posi ion o Tolna ej (T) is he s onges among he 5 companies. Conce ning he
i s h ee poin s o iew i is ma ke leade , and ega ding he ou h one i has an a e age
posi ion.
- Danone (D) can be conside ed as he second company. This i m is able o compensa e he
un a ou able alues o s a ic indica o s (quick a io and high deb - o-asse a io) wi h he be e
alues o dynamic, consequen ly mo e impo an , pa ame e s (deb epaymen s eng h and cash
cycle).
- The complex compe i i e posi ion o SoleMizo (SM), F iesland (F) and Kő ös ej (K) is weake ,
which is e en declined by con inuous loss in he case o SM and F. In spi e o i s a ou able
alues based on balance shee , Kő ös ej (K) is he las , because i s cash cycle and i s liquidi y
based on cash low (because o he nega i e ope a ing cash low) is he mos un a ou able among
he examined i ms.

- Based on he esul s o he compe i i eness analysis by liquidi y, i can be s a ed ha nei he he
size o he e enues no hei changing endency can be di ec ly connec ed o he liquidi y
posi ions o he i ms. Acco ding o hei complex liquidi y, he wo companies o he bigges
e enues ha e mo e un a ou able compe i i e posi ions han hei compe i o s wi h smalle
e enues.
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