European Financial and Accounting Journal 2016, 11(3):7-24 | DOI: 10.18267/j.efaj.159

Relationship between Liquidity and Profitability: Empirical Study from the Czech Republic

Jan Svitlík1, Lukáš Poutník2
1 Jan Svitlík; University of Economics, Prague, Faculty of Finance and Accounting, Department of Financial Accounting and Auditing, Winston Churchilla Square 4, 130 67 Prague 3, Czech Republic, <xsvij10@vse.cz>.
2 Lukáš Poutník; University of Economics, Prague, Faculty of Finance and Accounting, Department of Financial Accounting and Auditing, Winston Churchilla Square 4, 130 67 Prague 3, Czech Republic, <lukas.poutnik@gmail.com>.

The paper deals with relationship between liquidity and profitability ratios in the Czech Republic to investigate whether there exists correlation (a) within selected liquidity ratios and (b) selected liquidity ratios and selected profitability ratio in the Czech Republic during the period 2003-2013. Empirical data from Bureau van Dijk, Amadeus database were analysed from the point of both time-series and cross-sectional analysis. The main findings of the paper are that correlation within selected liquidity ratios is fairly strong while correlation between selected liquidity ratios and selected profitability ratio is relatively weak.

Keywords: Czech Republic, Empirical study, Liquidity, Profitability
JEL classification: G30, M41

Published: October 1, 2016  Show citation

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Svitlík, J., & Poutník, L. (2016). Relationship between Liquidity and Profitability: Empirical Study from the Czech Republic. European Financial and Accounting Journal, 11(3), 7-24. doi: 10.18267/j.efaj.159
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