A STUDY ON LIQUIDITY AND PROFITABILITY ANALYSIS

The term profitability is composed of two words ¿profit¿ and ¿ability¿. The word profit has been defined in a number of ways. The meaning of a profit differs according to the use and purpose of the figures. To obtain ¿profit¿ form accounting point of view, total expenses are deducted from the total revenues for a given period. The term ¿ability¿ reflects the power of the enterprise to earn profits. This ability is referred as ¿earning power¿ to ¿operating performance of the concerned investment¿. The word profitability may be defined as the ability of a given investment to earn a return from its use.. Liquidity management is the most essential component of financial management. It plays most dominant role in the successful functioning of an enterprise. Liquid asset may be defined as the money and assets that are readily convertible into money. Different degree liquidity. Money itself, by definition, the most liquid of assets, other assets has varying degrees of liquidity, depending on the most liquid of they can be turned into cash. The study focus on the most liquid assets of the company, cash and marketable securities.