Exploring the Relationship between Liquidity Ratios and Indicators of Financial Performance: An Analytical Study on Food Industrial Companies Listed in Amman Bursa

Abstract

The study aims to examine the relationship between liquidity ratios and indicators of financial performance (profitability ratios) in the food industrial companies listed in Amman Bursa during the period (2012-2014). The study sample included (8) industrial companies which operate in the field of food listed in Amman bursa. The results showed no relationship between all liquidity ratios and the gross profit margin, while there is a weak positive relationship between the current ratio and each of the operating profit margins and the net profit margin, as the study pointed to the existence of a positive relationship between (quick ratios, defensive interval ratio) and operating cash flow margin.  There is a positive relationship between liquidity ratios (current ratio, quick ratio, cash ratio) and return on assets.Keywords: Liquidity, Financial Performance, Profitability, Food Industrial Companies, Amman Bursa, Jordan. JEL Classifications: G10, G19