Liquidity-Profitability Trade-Off: Is It Evident Among Malaysian SMEs?

Authors

  • Nasruddin Zainudin Faculty of Finance and Banking Universiti Utara Malaysia, Malaysia

DOI:

https://doi.org/10.32890/ijms2006.13.2.5

Abstract

The purpose of this study is to empirically examine the relationship between liquidity and profitability on a sample of small and medium-sized enterprises (SMEs) in the Malaysian manufacturing sector. Using the nonparametric Spearman rank correlation coefficient analysis, the result reveals that there is a moderate positive association between liquidity and profitability. This suggests that profitable firms tend to maintain higher liquidity levels. The same test is again employed to establish the association bet7ueen liquidity and size of firms. The result indicates a weak positive correlation between the two variables, signifying that larger small firms tend to maintain higher liquidity levels. Finally, the Kruskal-Wallis test statistic was applied to investigate whether or not different industry sectors had different levels of liquidity. The outcome confirms that different industry sectors do have different degrees of liquidity.

 

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Published

06-12-2006

Issue

Vol. 13 No. 2 (2006): International Journal of Management Studies (IJMS) Vol. 13, No. 2 December 2006

Section

Articles

Research impact

Harvested 2026-09-07
20 citations, from OpenAlex — the highest of the sources checked

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Identifiers DOI 10.32890/ijms2006.13.2.5 OpenAlex W2228604934