Material Compensations and Their Impact on Liquidity

Andreja Katolik Kovačević

1 Andreja Katolik Kovačević

1

Affiliations

1. University of Slavonski Brod, Trg I. B. Mažuranić 2, 35000 Slavonski Brod, Croatia

Affiliations

1. University of Slavonski Brod, Trg I. B. Mažuranić 2, 35000 Slavonski Brod, Croatia

Abstract: The study analyzes the impact of the growth of material compensation per employee on the liquidity of companies in Eastern Croatia. The author uses non-parametric tests (Kruskal-Wallis, Mann-Whitney) and Spearman correlation to examine differences by company size and county, and the relationship between material compensation and current and quick liquidity ratios. The main findings show that the relationship between material compensation and liquidity is statistically significant only in small companies (weak positive correlation: Rho ≈ 0.21–0.25, P 0.001), while medium-sized and large companies do not show a consistent positive relationship; in large companies, in some cases, the relationship is negative. Regional analysis confirms similar patterns in all counties, with differences by company size being partially significant. The author concludes that the increase in material compensation usually accompanies liquidity growth in small companies, likely due to more efficient working capital management and productivity adjustments, but this relationship is not universal for medium-sized and large entities.

Keywords: Eastern Croatia, liquidity, material compensation

Abstract

Summary: The study analyzes the impact of the growth of material compensation per employee on the liquidity of companies in Eastern Croatia. The authors use non-parametric tests (Kruskal-Wallis, Mann-Whitney) and Spearman correlation to examine differences by company size and county, and the relationship between material compensation and current and quick liquidity ratios. The main findings show that the relationship between material compensation and liquidity is statistically significant only in small companies (weak positive correlation: Rho ≈ 0.21–0.25, P 0.001), while medium-sized and large companies do not show a consistent positive relationship; in large companies, in some cases, the relationship is negative. Regional analysis confirms similar patterns in all counties, with differences by company size being partially significant. The author concludes that the increase in material compensation usually accompanies liquidity growth in small companies, likely due to more efficient working capital management and productivity adjustments, but this relationship is not universal for medium-sized and large entities.