Indira Management Review

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The primary aim of this paper is to investigate the relationship between Cash Conversion Cycle (Liquidity) and firms' profitability. The analysis based on a sample of 20 Indian Automobile firms for the period 1996-2009. The results suggest that the managers can increase profitability of their firms by shortening the cash conversion cycle, accounts receivables period and inventory conversion period. The results suggest that managers can also increase the profitability of their firms by lengthening the accounts payables period. The study suggest an optimal cash conversion cycle as more accurate and comprehensive measures of liquidity analysis.

Keywords

Profitability, Accounts Receivables Period, Inventory Conversion Period, Ccounts Payable Period, Cash Conversion Cycle, Automobile Industry and Liquidity Analysis.
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