A Study on the Impact of Liquidity Ratios on Profitability of Selected Cement Companies in India

The present study aims to study the relationship between liquidity and profitability of selected Cement Companies in India. Every firm has to maintain good working capital in day to day operations to increase the profitability. For analyzing the liquidity ratios on profitability, the researcher has used 8 ratios in profitability and 3 ratios Liquidity. The results of the study show that CR and QR is having significant relationship with ROAE. ROE is correlated at 5% level of significance with ICR and at 1% level of significance with ROCE and EBDITCE. ROTA is positively correlated at 5% level of significance with ROCE, EBDITCE, ROACE and ICR Profitability ratios also play an important role in the financial positions of enterprises. Every stakeholder has interest in the liquidity position of a company. The Suppliers of company will check the liquidity of the company before selling goods on credit. ROCE is having significant relationship with ROE, ROTA, EBDITCE, ROAE, ROACE, TDDR and ICR at 5% and 1% level of significance. The study reveals that Liquidity and profitability have close relationship between each ratio.