ABSTRACT

Liquid assets assume significant position in the business. (But due to ignorance  of managerial ability, these assets are not properly employed[ towards achieving the primary business objective of profit maximization. 'Thus, this study is aimed at evaluating tile "effects of liquidity management on profitability" of fA1igerian enterprises. This paper porticos a brief conceptual review of liquidity and profitability and examines some of tile legally permissive schemes for reducing corporate liquidity burden in Mjeria, empirically providing evidence on the effect of such strategies on corporate profitability. The study adopts a combination of survey and longitudinal survey research designs. 'Financial figures on profit before ta profit after ta (1i turnover, current assets, current liabilities, etc of three quoted Nigerian companies were collected for the period of 11 yrs (1998 -2OO). this was supported by an attitudinal questionnaire with articulated questions on liquidity and profitability obtained from 224 respondents validated 6y experts ands flown to have an average acceptable mean of 1.5m in scale. The data were analyzed using descr4'tive statistics,  Regression analysis. 'From the analysis, the result reveals a correlation coefficient of - 719 and -841 at 1% level respectively. 'This result indicates that there is a/i inverse relationship between liquidity and profita6ility and that tile liquidity level of a company has a s1qnficant effect on tile profitability. Therefore, the study concludes and recommends that Nigerian companies pay adequate attention to their liquid assets, engage tile service of professionals for efficient and effective management of liquidity and male good and sound policies concerning tile management of liquidity bearing in mind that there are costs associated with liquidity. This willgo a li.ng way to reduce liquidity and profitability trade-off