INTRINSIC LIQUIDITY VALUE FOR NON-PROFIT ORGANIZATIONS
INTRINSIC LIQUIDITY VALUE FOR NON-PROFIT ORGANIZATIONS

Summary/Abstract: Cash maintained in nonprofit organizations is not a source of any interests and although the close to cash assesses together with credit lines available for enterprise are connected with resigning from realization of the part of incomes or costs, firms decide to maintain some liquidity reserves. And not only has this resulted from transactional needs, but also from precaution and speculative reasons. Investment in liquid reserves resulting from speculative demand for money may be assessed by usage of capital budgeting methods like: NPV or IRR or as a call option. In the article, each of these aspects of liquidity was taken into consideration and presented from nonprofit perspective. Nonprofit liquidity value determination may often significantly contribute to the solution of working capital management problems in these organizations.

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