Assessment of Financial Security of SMEs Operating in the Renewable Energy Industry during COVID-19 Pandemic

Today, one of the main priorities in Europe is to introduce measures to increase environmental protection. Therefore, SMEs operating in the branch related to renewable energy are essential for several EU priorities. SMEs can also be vulnerable, especially during times of crisis, which could negatively affect renewable energy development. Therefore, this paper aims to evaluate and analyze the financial security management of renewable energy SMEs during the COVID-19 pandemic. The research is conducted on SMEs operating in the renewable energy sector in Poland. The research periods are 2019 (before the COVID-19 crisis) and 2020 (during the crisis). By analyzing different financial performance ratios, we found that SMEs operating in the energy sector have been able to stabilize and maintain their current economic position compared to the past. The results of this study indicate that the receivables collection period, cash conversion cycle, and operating cycle could have been insignificantly shorter during the COVID-19 crisis. Furthermore, to have stronger financial security, SMEs have adopted a conservative policy in which the share of accounts receivable in current assets has been significantly reduced during COVID-19. In contrast, an insignificant increase in liquidity, quick ratios, and inventory turnover have been observed. In general, Polish SMEs have chosen to adopt conservative strategies during COVID-19 to have better liquidity security.