The Relationship Between Financial Liquidity and Profitability of Companies Listed on The Market For Alternative Investment (Mai)

Abstract

       The objectives of this study were to 1) study the financial liquidity of companies listed on the MAI, 2) study the profitability of companies listed on the MAI, and 3) study the relationship between liquidity and profitability of companies listed on the MAI. The sample group is the consumer products group. There are ten companies listed on MAI. Data collection in the secondary data from annual financial reports from 2017 - 2021, obtaining 50 years of annual analytical data. The company uses formulas for financial tools. Descriptive statistics and multiple regression analysis were used to test the study hypothesis.

       The findings were as follows: 1. Financial liquidity, including current ratio, quick ratio, account receivable turnover ratio, average collection period, inventory turnover ratio, days inventory, account payable turnover ratio, and average payment period, were averages of 3.01, 1.58, 6.96, 76.95, 2.84, 182.95, 4.81, and 107.46, respectively. 2. Profitability, including net profit margin, return on equity, and return on assets, averaged 5.03, 5.35, and 4.99, respectively. 3. The relationship between financial liquidity and profitability was: 3.1 The inventory and account receivable turnover ratios were positively correlated with the net profit margin. At the statistical significance level of .01 and .05, the account payable turnover ratio was negatively correlated with the net profit ratio at the statistical significance level of .01. 3.2 The inventory turnover ratio and account receivable turnover ratio positively correlated with the return on equity at the statistical significance level of .01, and the account payable turnover ratio was negatively correlated with the return on equity ratio at the statistical significance level of .05. 3.3 The account payable turnover ratio negatively correlated with the return on assets at the statistical significance level of .01.