Liquidity-Profitability Trade-Off: A Panel Study of Listed Non-Financial Firms in Ghana
Yusheng Kong, M. Musah, S. Antwi
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引用次数: 4
Abstract
Copyright © 2019 by author(s) and International Journal of Trend in Scientific Research and Development Journal. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (CC BY 4.0) (http://creativecommons.org/licenses/ by/4.0) ABSTRACT This study sought to explore the trade-off between liquidity and the profitability of non-financial firms listed on the Ghana Stock Exchange (GSE). A panel data extracted from the audited and published annual reports of fifteen (15) selected firms for the period 2008 to 2017 was used for the study. In the study, liquidity was surrogated by the Cash Flow Ratio (CFR) and the Cash Ratio (CaR), whilst profitability was proxied by Return on Capital Employed (ROCE). After undertaken some diagnostic and specification tests to address the basic assumptions of the Classical Linear Regression Model (CLRM), the study uncovered that, cash flow ratio had a significantly positive effect on the firms’ profitability as measured by ROCE [β=0.1050416, (p=0.038)<0.05], but the cash ratio had an insignificantly negative influence on the firms’ profitability as measured by ROCE [β= -0.0805403, (p=0.306)>0.05]. It was further discovered that, the cash flow ratio and the cash ratio had a combined significant effect on the firms’ profitability as measured by ROCE [Wald chi2(1)=7.43, (p=0.0244)<0.05]. In order to ensure continuous survival and success, the firms should not play with the issue of liquidity management. The entities are expected to maintain an optimal liquidity level that will be capable of performing the ‘twin’ role of meeting their financial obligations and at the same time maximizing their shareholders’ wealth. This optimal liquidity level could be obtained if the establishments are to meet the standards set by the Ghana Stock Exchange (GSE). Adhering to these standards will help the firms to reduce the cases of financial distress. In other words, the firms should keep an adequate level of liquidity that will not portend their going concern status, and yet allow them to make ample returns on their investments. Thus, the firms should strike a balance (trade-off) between their liquidity and profitability. Also, surplus liquidity and inadequate liquidity are two financial ailments that can simply wear down the firms’ profitability. Therefore, the establishments must embrace liquidity management in their attempt to optimize profitability. This could be attained if the firms lessen the amounts they hold in cash and focus more on investments so that, they could gain higher returns rather than tying them down in idle cash. From the perspective of theory, the outcome of this study is in tandem with that of prior studies by bringing to light the effect of liquidity on firms’ financial performance as measured by ROCE. The firms should therefore inculcate into their decisions the findings of this study so as to meet their operational and expansion needs, as well as the desires of their shareholders.
流动性与盈利能力的权衡:加纳非金融上市公司的面板研究
版权所有©2019由作者和《国际科学研究与发展趋势杂志》所有。摘要:本研究旨在探讨在加纳证券交易所(GSE)上市的非金融公司的流动性与盈利能力之间的权衡关系。该研究使用了从2008年至2017年期间选定的十五(15)家公司的经审计和公布的年度报告中提取的面板数据。在本研究中,流动性由现金流量比率(CFR)和现金比率(CaR)代替,而盈利能力由已动用资本回报率(ROCE)代替。在对经典线性回归模型(CLRM)的基本假设进行了一些诊断和规范检验后,研究发现,现金流比率对企业的盈利能力(以ROCE衡量)具有显著的正影响[β=0.1050416, (p=0.038)0.05]。进一步发现,现金流比率和现金比率对以ROCE衡量的企业盈利能力有显著的联合影响[Wald chi2(1)=7.43, (p=0.0244)<0.05]。为了确保持续的生存和成功,公司不应该玩弄流动性管理问题。这些实体被期望保持一个最佳的流动性水平,这将能够履行履行其财务义务的“双重”角色,同时最大化其股东的财富。如果企业要达到加纳证券交易所(GSE)设定的标准,就可以获得这种最佳流动性水平。遵守这些标准将有助于公司减少财务困境。换句话说,这些公司应该保持足够的流动性,这不会预示着它们的持续经营状态,但又能让它们从投资中获得充足的回报。因此,公司应该在他们的流动性和盈利能力之间取得平衡。此外,流动性过剩和流动性不足是两种金融疾病,可以简单地消耗公司的盈利能力。因此,机构必须拥抱流动性管理在他们的尝试优化盈利能力。如果企业减少持有的现金数量,更多地关注于投资,这样它们就可以获得更高的回报,而不是被闲置的现金束缚住。从理论的角度来看,本研究的结果与先前的研究结果是一致的,揭示了流动性对公司财务绩效的影响,以ROCE衡量。因此,公司应在其决策中反复灌输这项研究的结果,以满足其业务和扩展需要以及股东的愿望。
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