by
Saif Ur Rehman , Deputy Manager Budgeting, Planing and Reporting , Colgate Palmolive (Pakistan) Limited
the study suggests the following answers to each main question for this relation:
-
Is there a negative relationship between liquidity and profitability on the short
run?
No, it was observed for all the studied year s a significant and positive correlation
between the liquidity and the profitability variables. The results indicated that for the
studied companies, on the short term the higher the liquidity level of the company, the
higher its profitability. It contradicts the usual findings from the literature, indicating that
for this sample of airline carriers the dilemma between liquidity and profitability on the
short term do not exist.
-
Is there a positive relationship between liquidity indicators and profitability indicators on the medium to long term?
Yes, it was observed that companies with a poor indicator of liquidity or profitability
are usually not able to upkeep the other indicator in a high level; also the companies with
both high or low liquidity and profitability were stable in the same position after a few
years.
http://www.dafi.ase.ro/revista/5/Pira%20Roxana.pdf
http://campus.murraystate.edu/academic/faculty/lguin/FIN330/Liquidity%20vs%20Profitability.htm