TRADE-OFF BETWEEN LIQUIDITY & PROFITABILITY: A STUDY OF SELECTED MANUFACTURING FIRMS IN SRI LANKA
Keywords:
Liquidity, Profitability, Corporate Finance, Manufacturing FirmsAbstract
Profitability and liquidity are the most prominent issues in the corporate finance literature. The ultimate goal for any firm is to maximize profitability. However, too much attention on profitability may lead the firm into a pitfall by diluting the liquidity position of the organization. In this way, the present study is initiated to find out the cause and effect relationship between liquidity and profitability. The study covered 31 listed manufacturing firms in Sri Lanka over a period of past 5 years from 2007 to 2011. Correlation analysis and descriptive statistics were used in the analysis and findings suggest that there is no significant relationship between liquidity and profitability among the listed manufacturing firms in Sri Lanka.
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References
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