Analysis of financial liquidity and predicting the bankruptcy risk of Indian cement companies

Abstract

Liquidity is important to the efficient running of any business. Maintaining liquidity on a daily basis is a critical part of managing working capital to guarantee that the company works effectively and achieves its obligations.Efforts to boost profitability, on the other hand, are likely to lower businesses' liquidity, and a focus on liquidity may have an adverse effect on profitability. The study's major goal was to determine if organizations can make a profit while retaining essential liquidity, or whether they are willing to compromise liquidity to make a bigger profit. The data has been analyzed using Motaal's Liquidity Assessment Test and Spearman's Rank Coefficient of Correlation. This study makes an attempt to examine the link between the sample businesses' liquidity and profitability, as well as the possibility of bankruptcy. Among the ten selected cement companies, UltraTech Cement, Shree Cement, Ambuja Cement, ACC, J.K. Cement, Ramco, Birla Corporation, JK Lakshmi, Rain Industries, and India Cement, UltraTech Cement, Shree Cement, Ambuja Cement, ACC, J.K. Cement, Ramco, Birla Corporation, JK Lakshmi, Rain Industries, India Cement and UltraTech. Shree Cement, according to Motaal's liquidity test, has the best liquidity status.