Impact of liquidity on the enterprise profitability

Liquidity indicators – both current and immediate - are regarded as too static to clearly state whether their changes – either increase or decrease – affect favourably or adversely the enterprise profitability. In the article a hypothesis is verified that a drop in liquidity leads to an increase in the enterprise profitability. The research uses a group of enterprises quoted on the Warsaw Stock Exchange. The relationships between traditional liquidity indicators (current and immediate) as well as currency conversion cycle and measures of profitability are also considered. The article provides the reader with general conclusions formed on the basis of the investigation