Impact of liquidity and profitability on share price: An analysis of Indian cement companies

Abstract

: All of the choices made in the workplace concerning cash, receivables, inventory, and payables influence how a corporation maintains its liquidity level. Liquidity plays a vital role in the successful functioning of every business. The important part in managing working capital is maintaining liquidity on a day-to-day basis to ensure the smooth running of the organisation and to meet its obligations. Hence, it is very important to keep a close eye on the liquidity position of the company as without it, the company cannot survive. But efforts to increase the profitability would tend to reduce firms' liquidity and too much attention on liquidity would tend to affect profitability. No doubt, every firm tries to maximise profitability by maintaining liquidity. But the question arises, is it the liquidity or profitability that helps in maximizing shareholder’s wealth by increasing the share price of Indian cement companies? Hence, the study is aimed to understand the impact of liquidity and profitability on the share price of Indian cement companies.: To determine wheather investors in the cement sector should prefer companies those are liquid or profitable, we applied the t-test, correlation test, and the resultant p-value. It is found that, having a quicker cash conversion cycle (CCCy) increases the company's market value indicating that, higher the liquidity, more is the chances that the share price may go up.: It is found that the profitability in cement companies isn't as high as the company's ability to pay its debts, i.e. liquidity. In other words, the liquidity of Indian cement companies are more and the profitability is less, and the market value of a firm rises in tandem with the growth in its liquidity. Moreover, when the market value grows, the CCC decreases, whereas the economic value added (EVA) increases.: Prior studies reveal that the working capital requirements of Indian cement companies are much more as compared to other industries. Although low operational cash affects the daily operations of the business, excess working capital usage will harm the firm's profitability. Hence, the question, why do Indian cement businesses need so much of working capital? This study's purpose was to answer it. The findings of this research states that, companies believe that maintaining liquidity will increase their share price.: Conceptual Research

Antimicrobial activity of biosynthesized silver nanoparticles, amoxicillin, and glass-ionomer cement against Streptococcus mutans and Staphylococcus aureus

“…Fourier transform infrared (FTIR) analysis. FT-IR spectrum was obtained using a Shimadzu IR-470 Spectrometer (Shimadzu, Japan) in the range of 500-4000 cm −1 [31].…”

The relationship between inventory leanness and product innovation with the contingent role of market concentration

“…We introduce the executives' number (EN) into the analysis. Then, in line with the previous research by Panigrahi (2013), Return-on-Assets (ROA) provides information about the profitability of firms that is closely related to inventory management and utilized as a control variable in this analysis. Finally, as inventory management is closely associated with investment efficiency (Wang et al, 2021), we introduce an inefficiency investment degree (ID) into our model.…”

“…Thus, we consider the total liabilities to assets ratio a control variable for measuring a firm's financial obligations ratio. Further, opportunity growth ( OG ) and operating revenue growth ( ORG ) are two indicators of firm growth that affect the implementation of innovation and inventory management (Panigrahi, 2013). They are calculated as the ratio of the market capitalization to total assets and the ratio of changes in operating revenue to previous operating income, respectively, as control variables into our model.…”

Does lean inventory management alleviate financing constraints?

“…OPR represents the cumulative revenue generated from business operations, while IG signifies the ratio of changes in current investment to previous investment. Both variables are pivotal indicators of firm growth and carry implications for financial performance and inventory management (Panigrahi, 2013). Lastly, we considered Firm Age ( Age ) to account for the influence of manufacturing enterprise age on financial constraints.…”