In the corporate finance, liquidity management and profitability are widely debated areas. Liquidity management plays a dynamic role in determining the effectiveness of the banking sector with potential influence in smooth functioning. The objective of the study is to scrutinize the impact of liquidity management on the profitability of Pakistani banks, covering period of 2006-2016. The secondary financial data obtained from audited annual financial reports were analyzed using descriptive and inferential statistics. Return on assets (ROA) and Return on equity (ROE) have been used as measures of bank's profitability while as, Current Ratio (CR) advances to deposit ratio (ADR), Cash deposit ratio (CDR) and Deposit Assets Ratio (DAR) represented liquidity management. The result demonstrates that ADR, CDR and DAR
Optimal tradeoff between liquidity and profitability is an imperative phenomenon that demands pragmatic managerial focus in almost every organization. The study emphases to measure and analyzes the empirical relationship between liquidity and profitability of 26 Modaraba companies operating in Pakistan. Secondary data for 2006-2012 have been analyzed using descriptive statistics, Pearson correlation, multiple regression and SPSS (version 20) used for data analysis. Empirical findings reveal that profitability of Modaraba companies operating in Pakistan has not been significantly influenced by liquidity indicators, only CATCL has a significant control over ROA and LTITTA has strong positive and significant impact on ROE. It is suggested that more evidences required from financial and non-financial sector in testifying the theoretical association of liquidity and profitability. Either liquidity of Modaraba companies has an impact upon solvency, leverage or efficiency that is a separate prospective horizon.
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