Liquidity-profitability tradeoff: an empirical investigation in an emerging market

This inquiry empirically examines the relation between profitability and liquidity, as measured by the agency of current ratio and cash gap (cash conversion cycle) upon a sample of joint stock companies in Saudi Arabia. Using correlation and regression analysis the inquiry found significant negative relation between the firm's profitability and its liquidity horizontal as measured by current ratio. This relationship is more evident in firms with high common ratios and longer cash conversion revolution of times At the industry level, however, the application of mind found that the cash conversion circle of time or the cash gap is of more importance as a measure of liquidity than common ratio ...