Impact of Liquidity on Profitability in Sugar Sector of Pakistan

Abstract

The main purpose of this study is to analyze the impact of liquidity on the profitability in sugar sector of Pakistan. The data were collected from the annual reports of the listed sugar mills in Pakistan, for the period of 2007-2012. For the purpose of analysis we used SPSS; the results are derived by applying the correlation and multiple regression analysis. Correlation results show that there is strong positive relationship between all variables. According to the regression analysis all the alternate hypothesis are accepted because inventory, cash, account receivable are significant at 5% level of significance. So, the results show that firms must utilize its liquidity in best way in order to improve the profitability because liquidity variables play significant role towards improving the profitability of sugar sector in Pakistan.

Keywords: Cash, Account receivables, Inventory, Sugar industry of Pakistan, Profitability