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The Influence of Liquidity and Solvency on Performance within the Healthcare Industry: Evidence from Publicly Listed Companies

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  • Larissa Batrancea

    (Faculty of Business, Babes-Bolyai University, 7 Horea Street, 400174 Cluj-Napoca, Romania)

Abstract

Any lucrative economic activity implies aiming at obtaining a profit, including companies in the healthcare industry. The present study analyzes the extent to which financial liquidity and financial solvency influenced the performance of 34 healthcare companies that are publicly traded on the New York Stock Exchange. The period of analysis spanned from Q4 2005 to Q4 2020. The research methodology favored a complex approach by running econometric models with two-stage least squares (2SLS) panel and panel generalized method of moments (GMM). Empirical evidence showed that the financial indicators current liquidity ratio, quick liquidity ratio, and debt to equity ratio significantly influenced company performance measured by return on assets, gross margin ratio, operating margin ratio, earnings before interest, tax, depreciation, and amortization. Strategies intended to improve business performance based on liquidity and solvency insights are also addressed.

Suggested Citation

  • Larissa Batrancea, 2021. "The Influence of Liquidity and Solvency on Performance within the Healthcare Industry: Evidence from Publicly Listed Companies," Mathematics, MDPI, vol. 9(18), pages 1-15, September.
    • Handle: RePEc:gam:jmathe:v:9:y:2021:i:18:p:2231-:d:633352
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    References listed on IDEAS

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    1. Anca Nichita & Larissa Batrancea & Ciprian Marcel Pop & Ioan Batrancea & Ioan Dan Morar & Ema Masca & Ana Maria Roux-Cesar & Denis Forte & Henrique Formigoni & Adilson Aderito da Silva, 2019. "We Learn Not for School but for Life: Empirical Evidence of the Impact of Tax Literacy on Tax Compliance," Eastern European Economics, Taylor & Francis Journals, vol. 57(5), pages 397-429, September.
    2. André Luiz de Souza Guimarães & Valcemiro Nossa, 2010. "Working capital, profitability, liquidity and solvency of healthcare insurance companies," Brazilian Business Review, Fucape Business School, vol. 7(2), pages 37-59, May.
    3. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
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