The Effects of Liquidity Management on Firm Profitability: Evidence from Sri Lankan Listed Companies

Abstract

This paper has focused on analyzing the nature of the liquidity and its impact of profitability from listed companies in Sri Lanka. In this study an attempt has been made to analyze the liquidity and its impact on profit earning capacity during 2008 to 2012.To evaluate the profitability it has been used the ratio of ROE and ROA. Based on the nature of data collection through different tools, the following statistical techniques were employed: Descriptive analysis, correlation and regression. The research findings show that there is no significant relationship between liquidity and profitability. These results are consistent with prior empirical studies.

Keywords: liquidity ratios, corporate profitability, Sri Lanka.