Corporate Liquidity and Profitability Patterns of Some Selected Textile Manufacturing Companies Listed with Dhaka Stock Exchange Limited

Abstract

Liquidity and profitability management are very important issues in the growth and survival of business entity. The ability to hold the trade-off between the two elements concerns the financial managers because either inadequate liquidity or excess liquidity may be damaging to the smooth operations of the organization as well as profitability. The primary aim of this paper is to see empirically the overall liquidity and profitability condition of textile industry and finding out whether there is any significant relationship between liquidity and profitability based on performance ofsome selected manufacturing companies in textile industry listed with Dhaka Stock Exchange Limited. The analysis is based on a sample of five manufacturing companies of textile industry listed with Dhaka Stock Exchange Limited for the period 2009-2012, i.e., fifteen firm years. Correlation analysis and descriptive statistics were used in the analysis. Findings suggest that there is no statistically significant relationship between liquidity and profitability and have a relatively weak liquidity conditions among listed manufacturing companies of textile industry. Besides, the study suggests that the liquidity has low degree of influence on the profitability and there exist an inconsistency in liquidity and profitability management among the selected manufacturing companies.

Keywords

• Cash Conversion Cycle (CCC)
• Receivables Collection Period (RCP)
• Payables Repayment Period (PRP)
• Inventory Conversion Period (ICP)
• Current Ratio (CR)
• Liquidity Ratio (LR)

How to cite

Md. Ahasan Uddin, Mohammad Moniruzzaman, ACA (2016). Corporate Liquidity and Profitability Patterns of Some Selected Textile Manufacturing Companies Listed with Dhaka Stock Exchange Limited. Sonargaon University Journal, 1(1), 126–142.

@article{uddin20169,
  title   = {Corporate Liquidity and Profitability Patterns of Some Selected Textile Manufacturing Companies Listed with Dhaka Stock Exchange Limited},
  author  = {Md. Ahasan Uddin and Mohammad Moniruzzaman and ACA},
  journal = {Sonargaon University Journal},
  volume  = {1},
  number  = {1},
  pages   = {126--142},
  year    = {2016},
  issn    = {2518-3125},
  url     = {https://su.edu.bd/journal/volume-1-number-1/corporate-liquidity-and-profitability-patterns-of-some-selected-textile}
}