LIQUIDITY AND PROFITABILITY ANALYSIS OF THE SELECTED AUTOMOBILE COMPANIES OF INDIA
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Abstract
Liquidity and profitability ratios are very vital indicators of the company’s performance for the short- and longterm view. Continuing profit help for the future growth of the company and liquidity proves the smooth running
of the business on a short-term basis. In this study selected Automobile companies of India are used for the
analysis. The purpose of the study is to find out the liquidity and profitability performance of companies. And to
check relationship between liquidity and profitability of selected companies. For the purpose of the study three
companies are selected from the Automobile sector which are Maruti Suzuki India Ltd., Tata Motors and
Mahindra and Mahindra Ltd. The data is collected from annual report of selected companies. The study period is
for 10 years. From 2013-14 to 2022-23. For the analysis two statistical techniques arithmetic mean and
regression analysis are used. From the analysis it has been observed that in liquidity ratio, Mahindra and
Mahindra Ltd. Performed better than Maruti Suzuki India Ltd and Tata Motors Ltd. while in profitability ratio
Maruti Suzuki India Ltd. Performed better than Mahindra and Mahindra Ltd and Tata Motors Ltd. The study
concludes that there is no statistically significant relationship between the liquidity ratio and profitability ratio.
Description
Companies’ performance affects many stakeholders like shareholders, directors, employees and customers etc.
there are many factors that affect this performance which depends upon the size of the company, aera, customers
and other factors. Financial ratios are useful indicators to measure a company’s performance and financial
situations. To understand the performance of the company varies indicator can be used from which liquidity and
profitability ratios are commonly used. Liquidity indicates the ability of company to pay its debts in short-term
maturing within one year. A company’s liquidity resources can be maintained in variety of ways such as Cash
on hand, cash in bank, current assets, cash credit and overdrafts. and profitability indicates the ability of
company to earn a profit. Profitability is the basic aim of any organisation. Without profitability business will
not survival in long run. Therefore, estimating future profitability and analysing past and present profitability are
important. The Automobile industry is one of the key drivers that boost the economic growth of the country.
The automobile industry is the significant driver of Indian economy. The automobile industry is one of the
largest revenues generating industry in India. This study aims to measure the impact of liquidity ratio on the
profitability of the listed automobile firms of India. This study also tries to find that is there is any significant
impact of liquidity ratios on profitability either positive or negative.
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