Expansion of the current methodology for the study of the short-term liquidity problems in a sector

Casas, Elena Rondós; Linares‐Mustarós, Salvador; Noguer, M.

doi:10.3926/ic.1085

Cited by 8 publications

(8 citation statements)

References 14 publications

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“…SMCs use to have a short-term management style, giving priority to management by liquidity, rather than to economic profitability (De Vries et al, 2009;Lakatos, 2020). The financial ratios, based on the financial information of the companies, allow an in-depth analysis of both the companies and the sector and allow the assessment of the situation of the sector in terms of short, medium-and long-term management (Bordeianu and Radu, 2020;Reyes-Ruiz and Hernández-Hernández, 2020;Rondós-Casas et al, 2018). In this study, the current liquidity ratio (Bordeianu and Radu, 2020) was used for the analysis of short-term and ROA (Bordeianu and Radu, 2020) from a medium-and long-term perspective.…”

Section: Discussionmentioning

confidence: 99%

“…Those numbers are usually based on the Balance Sheet and/or the Statement of Profit and Loss. These financial ratios provide important information to strengthen the decision-making (Reyes-Ruiz and Hernández-Hernández, 2020;Rondós-Casas et al, 2018). They are powerful tools to help summarize financial statements and the health of a company or enterprise (Bordeianu and Radu, 2020).…”

Section: Liquidity Ratiosmentioning

confidence: 99%

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Directions for Management in Small and Medium Hotels and Restaurants Companies

Lucas¹,

Ramires²

2022

GTG

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The primary goal is to validate if there is a relationship between liquidity and economic profitability in hotels and restaurants sectors, in small and medium companies (SMCs). The question to be answered is whether the short-term view will not compromise the future results of those companies. After a literature review, hotels and restaurants financial ratios were analysed over 5 years. Data were also treated using linear regression, to understand if there is a relation between liquidity and economic profitability. All the financial information was obtained from the SABI database. According to the studied literature, it was not expected to have any relationship between liquidity and economic profitability. The study consists of the Portuguese context in the latest 5 years period before COVID-19, in the hotels and restaurants sector, and it does validate those previous studies. Indeed, findings show no relationship between both ratios. Findings show to hotels and restaurants managers that liquidity-based management does not necessarily lead to future economic profitability. Even if liquidity is necessary for accurate short-term management, it shall not be used to guide them in the decision-making process concerning economic profitability. The results obtained are of enormous importance to both practitioners and academics. Managers must understand that they must take into account the need for liquidity in a short-term vision, but they must also understand that this fact alone is not a guarantee of good profitability in a long-term vision. The results in the empirical study also help to reinforce the inexistence of a relationship between the liquidity ratio and the economic profitability ratio in the literature.

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Section: Discussionmentioning

confidence: 99%

Section: Liquidity Ratiosmentioning

confidence: 99%

Directions for Management in Small and Medium Hotels and Restaurants Companies

Lucas¹,

Ramires²

2022

GTG

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“…The liquidity ratio is a ratio that shows the company's ability to fulfill its obligations or pay short-term money that must be fulfilled immediately. In other words, the liquidity ratio is a ratio that can be used to measure the extent of the company's ability to pay off its short-term obligations that are due soon (Pariyanti & Zein, 2018;Rondós-Casas et al, 2018). According to Hanafi & Halim (2016:75):…”

Section: Liquidity Ratiomentioning

confidence: 99%

Cooperative Financial Performance Analysis of Liquidity, Solvency, Profitability, and Activity Ratios

Hamsyah,

Latif,

Dewi

2023

IJoSPaT

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Cooperatives have an essential role in constructing national economic development, and their financial analysis is needed to evaluate the efficiency of their financial performance. This study aims to evaluate cooperatives' profitability, solvency, liquidity, and activity ratios in the years 2016–2018. The results will be analyzed using trend lines to determine if cooperative financial performance increased or decreased during that time. In this study, researchers employ liquidity ratios, specifically current ratios, as analytical tools. Solvency Ratios consist of Total Debt to Equity Ratio and Total Debt to Assets Ratio. Activity Ratios using ratios—accounts receivable turnover—and Profitability Ratios comprising Economic Profitability, Return on Assets, and Net Profit Margin. The study's findings and the subsequent discussion demonstrate that the results were excellent when the liquidity ratio was calculated using the current ratio from 2016 to 2018. The solvency ratio is excellent based on the Total Debt to Equity Ratio and Total Debt to Assets Ratio. Both the total debt-to-equity ratio and the total debt-to-total assets ratio show annual rises in their trend graphs. Economic profitability, return on assets, and net profit margin are used to calculate the profitability ratio, which yields excellent results. The Receivables Turnover ratio calculates the Activity Ratio, which yields subpar results. This analysis suggests that to raise activity ratios, attention should be paid to asset and operational management solutions that are more effective.

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“…This includes Box-Cox transformations (Ezzamel & Mar-Molinero, 1990;Mcleay & Omar, 2000;Watson, 1990), logarithmic transformations (Cowen & Hoffer, 1982;Deakin, 1976;Sudarsanam & Taffler, 1995), transformations by ranges (Kane et al, 1998), by square roots (Deakin, 1976;Frecka, & Hopwood, 1983;Martikainen et al 1995), by generalized risk box (Bahiraie, Azhar & Ibrahim, 2010), and other processing methods, such as weight of evidence (Nikolic et al 2013), outlier trimming (Ezzamel & Mar-Molinero, 1990;Frecka & Hopwood, 1983;Lev & Sunder, 1979;Martikainen et al, 1995;So, 1987;Watson, 1990), and outlier winsorization (Lev & Sunder, 1979). Rondós-Casas et al (2018) has shown the usefulness of an alternative methodology for calculating sector ratios. This provides more reliable information on the capacity of a sector to globally return its debt over the short term.…”

Section: Usefulness Of Sectoral Means In Financial Analyses Of Enterpmentioning

confidence: 99%

Usefulness of Sectoral Means in Financial Analyses of Enterprises

Mioduchowska-Jaroszewicz

2019

E-Finanse

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JEL classification: G32Aim: The aim of the paper is to assess the usefulness of sectoral means in financial analyses of enterprises.Research methods: The article uses a deductive approach to assess the suitability of sectoral means used in analyses of t financial standing of enterprises. The method of analysis and logical construction was used for literature review. The methods of descriptive statistics such as arithmetic means, standard deviation and coefficient of variation were used in order to analyze the data and draw conclusions based on the results. Contribution: The assessment of the usefulness of sectoral means in the context of their variability seems to be a crucial aspect for the analysis of a company's financial situation. When assessing the financial standing of an enterprise, it is necessary to use a comparative analysis method, based on, inter alia, a comparison in space. This type of comparison requires the use of sectoral means, whose assessment is extremely important to drawing reliable and correct conclusions regarding the financial situation of a company.

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Expansion of the current methodology for the study of the short-term liquidity problems in a sector

Cited by 8 publications

References 14 publications

Directions for Management in Small and Medium Hotels and Restaurants Companies

Directions for Management in Small and Medium Hotels and Restaurants Companies

Cooperative Financial Performance Analysis of Liquidity, Solvency, Profitability, and Activity Ratios

Usefulness of Sectoral Means in Financial Analyses of Enterprises

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