Analysis of the Business Operations of a Selected Company in Terms of its Financial Performance

Abstract

The aim of this article is to assess the financial performance of a selected industrial enterprise – the Orlen Group. The research methodology adopted, based on the measurement and analysis of free cash flows (FCF), combining accrual and cash accounting, allowed for an analysis of the ability to generate cash flows and maintain cash stability in the years 2020–2024. The study used financial data from the company's financial statements. The article highlights the main factors shaping cash flows in key decision-making areas. The research questions posed in this article primarily concern if the selected company generates sufficient funds to cover its current expenses and if it is able to finance future investments necessary for further development and expansion. The analysis showed that in the face of growing market challenges, the Orlen Group maintains its adopted strategy of business development and expansion, which may indicate its financial effectiveness. The research found that the Orlen Group's operating profitability is reflected in its ability to generate a financial surplus in 2021, 2023, and 2024, which contributes to the stabilization of the Group's financial liquidity. During the uncertain economic conditions of 2020 and 2022, the company generated negative cash flows. The risk factors that affected the Group's business performance can be found in two areas: the macroeconomic situation, which affects the volatility of commodity prices, especially oil and gas, and high investments aimed at creating future revenue streams. Although negative free cash flow to firm may be a warning sign of financial instability, in this particular case it appears to be a temporary and necessary element of a long-term growth strategy based on a proactive CAPEX strategy, a strategy that seems to be bringing the desired results, observing the company's growing market capitalization.