Mining Industry Enterprises Risk Sensitivity & Financial Liquidity Decisions : The Case of Kghm Polska Miedź S.A

Liquidity management should contribute to realization of the fundamental enterprise aim that is maximization of owner wealth. The enterprise owner wealth maximization strategy is executed with a focus on risk and uncertainty. Financial liquidity in enterprise is maintained and managed for risk reduction purposes. The paper presents the consequences that can result from operating risk that is related to liquidity policy in the context of mining utility industry firms. An increase in the level of liquid assets in an enterprise increases both net working capital requirements and the costs of holding and managing financial liquidity. Both of these decrease the value of the firm. But not always it works in the same way, it depends on risk sensitivity of the business which differ between branches and individual representatives from each branch. Case study data presents and is an material for discussion about general model presented in the paper. The relation between liquid levels and risk sensitivity is also illustrated by empirical data from mining industry empirical data