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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. Linda Puspita SARI & Anggita Langgeng WIJAYA, 2022. "Financial Liquidity of Indonesian Manufacturing Companies before and during the COVID-19 Pandemic," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 3(1), pages 61-72, January.
    3. 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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