Corporate Liquidity Management and its Impact on Profitability of Listed Firms in Ghana

Abstract

Liquidity management is a crucial aspect of corporate financial management due to its ability to predict the health of firms. The main objective of this study was to analyze the relationship between liquidity management and profitability. This study was necessary because effectively managed liquidity does not only provide confidence for managers; it also provides assurance for providers of funds and other stakeholders that their interests are not being compromised. 20 companies were sampled for this study from the Ghana Stock Exchange (GSE). The study used quantitative approach to answer the research questions. Pearson Correlation and Multiple Regression were used to analyze the data.

Results from the Correlation analysis and Multiple Regression showed that liquidity management is negatively related with profitability; which conforms to findings of other studies. However, Cash Ratio is positively related with profitability. It was also revealed that leverage has no relationship with liquidity management.