Impact of Liquidity Management and Asset Management on Firm Performance
Keywords:
Returns on Equity, Liquidity Management, Asset Management, Firm PerformanceAbstract
The study aims to investigate the impact of liquidity management and asset management on firm’s profitability in Pakistan. The evidence is based on the 50 non-financial firms over the period of 2017-2021.The firm’s profitability is measured via returns on equity. This study used current ratio as a proxy of liquidity management. Whereas, total asset turnover ratio and fixed asset turnover ratio are considered for asset management. The findings based on static models, reveal that liquidity management positively affect the profitability of the firm. Similarly, the results support the positive role of asset management in shaping firm performance. This research found that both liquidity management and asset management, measured by various financial ratios, significantly and positively influence firm performance, supporting both hypotheses regarding their impact on return on assets and equity.
References
Ismail, R. (2016). Impact of liquidity management on profitability of Pakistani firms: A case of KSE-100 Index. International Journal of Innovation and Applied Studies, 14(2), 304-314. https://ijias.issr-journals.org/abstract.php?article=IJIAS-15-285-03
Khan, Q. U. (2015). The impact of liquidity management on firm profitability, an empirical analysis of Pakistani cement companies listed on Karachi stock exchange in Pakistan. Journal of Poverty, Investment and Development, 18(0), 77. https://www.iiste.org/Journals/index.php/JPID/article/view/27273
Kotane, I., Kuzamina-Merlino, I. (2012). Assessment of financial indicators for evaluation of business performance. European Integration Studies4(6), 480-502. https://doi.org/10.5755/j01.eis.0.6.1554
Rashid, C. A. (2021). The efficiency of financial ratios analysis to evaluate company’s profitability. Journal of Global Economics and Business, 2(4), 119-132.
Reheman, A., Afza, T., Qayyum, A., Bodla, M.A. (2010). Working capital management and corporate performance of the manufacturing sector in Pakistan. International Research Journal of Finance and Economics 2(47), 289-330. https://jbrmr.com/cdn/article_file/2019-03-31-17-45-24-PM.pdf
Sultan, D.A.S. (2014). Financial statements aanalysis - Measurement of performance and profitability: Applied study of Baghdad Soft-Drink industry. Research Journal of Finance and Accounting, 5(4), 2222-2847. https://iiste.org/Journals/index.php/RJFA/article/view/11276
Suprapto, Y., & Lindawati, L. (2023). The effect of financial ratio on firm value: Food and beverage sector listed in IDX. At-Tadbir : Jurnal Ilmiah Manajemen, 7(2), 139. https://doi.org/10.31602/atd.v7i2.11846
