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Liquidity, Growth and Profitability of Non-financial Public Listed Malaysia: A Malaysian Evidence

Author

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  • Mazurina Mohd Ali
  • Nik Noor Ayu Nik Hussin
  • Erlane K. Ghani

Abstract

This study examines the relationship between liquidity, growth and profitability of non-financial firms listed on the Bursa Malaysia. Specifically, this study examines the relationship between liquidity and growth on profitability for 50 non-financial public listed firms in Malaysia. Using panel data technique on 250 observations across a five-year period, this study shows that liquidity has a strong positive relationship with profitability in terms of return on asset of the firms. However, liquidity in terms of quick ratio has no impact on profitability. This study also shows that firm growth in terms of sales growth has a negative relationship with profitability. However, this study shows that liquidity and growth in general do not influence profitability in terms of return on equity, although the result shows that sustainable growth rate has a positive relationship on profitability. This study highlights the importance of these measures in measuring performance. The findings in this study provide guidelines to the firms on the measures that best to be used in evaluating performance so that appropriate strategies can be adopted to increase performance.

Suggested Citation

  • Mazurina Mohd Ali & Nik Noor Ayu Nik Hussin & Erlane K. Ghani, 2019. "Liquidity, Growth and Profitability of Non-financial Public Listed Malaysia: A Malaysian Evidence," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(3), pages 194-202, May.
    • Handle: RePEc:jfr:ijfr11:v:10:y:2019:i:3:p:194-202
    DOI: 10.5430/ijfr.v10n3p194
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    References listed on IDEAS

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    2. Camelia Burja Decemrie, 2011. "Factors Influencing The Companies' Profitability," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(13), pages 1-3.
    3. Lee, Sanghoon, 2014. "The relationship between growth and profit: evidence from firm-level panel data," Structural Change and Economic Dynamics, Elsevier, vol. 28(C), pages 1-11.
    4. Mohammed Ziaur Rehman Muhammad Nauman Khan & Imran Khokhar, 2015. "Investigating Liquidity-Profitability Relationship: Evidence from Companies Listed in Saudi Stock Exchange (Tadawul)," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 5(3), pages 1-11.
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    Cited by:

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    2. José Manuel Maside-Sanfiz & María-Celia López-Penabad & Ana Iglesias-Casal & Juan Torrelles Manent, 2024. "Determinants of the profitability of Sheltered Workshops: efficiency and effects of the COVID-19 crisis," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    3. Anh Huu Nguyen & Duong Thuy Doan, 2020. "The Impact of Intellectual Capital on Firm Value: Empirical Evidence From Vietnam," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(4), pages 74-85, July.
    4. Ajeigbe Kola Benson & Ganda Fortune, 2022. "Sensitivity analysis of the impact of Covid-19 on corporate sustainability and company performance:Recovery strategy for companies and nations around the world," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(3), pages 16-26, April.
    5. Richard Yeaw Chong Seow, 2023. "Comparative Financial Performance and Firm Valuation Analysis: A Malaysian Logistics Service Provider Case Study," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(7), pages 594-613, July.

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