Factors that Influence the Liquidity–Profitability Relationship in Companies Listed on the WSE Cover

Factors that Influence the Liquidity–Profitability Relationship in Companies Listed on the WSE

Central European Economic Journal

Volume 12 (2025): Issue 59 (January 2025)

By:

Open Access

|Jun 2025

Figures & Tables

The relationship between liquidity and profitabilitySource: Own elaboration based on Gajdka, J. (2000). Zarządzanie finansowe: teoria i praktyka (Vol. 2). Fundacja Rozwoju Rachunkowości w Polsce, p. 467

Correlation matrix for portfolios based on asset levels

Assets < average	CR	CCC
ROE	0.1195 ^***	−0.0754 ^***
ROA	0.2406 ^***	−0.0452 ^***

OLS model for lower-than-average sales and liquidity influencing profitability

Sales < average
Endogenous	Constant	CCC	lnA	Adj. R²	F-stat	N	Heteroskedasticity-corrected
ROE	−0.0519	−0.00005 ^***	0.0084	0.9799	33383.3 ^***	1365	Yes
ROA	−0.1053 ^**	−0.000001 ^***	0.0113 ^***	0.8613	4418.782 ^***	1423	Yes

Correlation matrix for portfolios based on sales levels

Sales < average	CR	CCC
ROE	0.1386 ^***	−0.0748 ^***
ROA	0.2513 ^***	−0.0514 ^***

Correlation matrix for portfolios based on NWC management

Aggressive strategy of NWC	CR	CCC
ROE	0.2163 ^***	−0.2396 ^***
ROA	0.3319 ^***	−0.2152 ^***
Moderate strategy of NWC	CR	CCC
ROE	0.0196	−0.1873 ^***
ROA	0.1107 ^***	−0.1396 ^***
Conservative strategy of NWC	CR	CCC
ROE	−0.1722 ^***	−0.1351 ^***
ROA	−0.1248 ^***	−0.1661 ^***

OLS model for moderate strategy and liquidity influencing profitability

Moderate strategy CR <1;2>
Endogenous	Constant	CCC	lnA	Adj. R²	F-stat	N	Heteroskedasticity-corrected
ROE	0.0151	−0. 000002 ^***	0.0049	0.2222	90.8459 ^***	630	Yes
ROA	0.0290	−0.00001 ^***	0.0010	0.0755	26.8555 ^***	634	Yes

OLS model for higher-than-average levels of assets and liquidity's influence on profitability

Assets > average
Endogenous	Constant	CCC	lnS	Adj. R²	F-stat	N	Heteroskedasticity-corrected
ROE	0.1112	0.0002	0.0003	0.0112	0.6802
ROA	0.1006 ^*	0.00002	−0.0040	0.0115	0.6993	123	Yes

Data statistics based on the sales and asset levels

	Sales < average	Sales > average	Assets < average	Assets > average
No observations	1467	203	1612	124
S	172,490	8,661,400	289,860	12,608,600
A	360,058	22,677,400	338,439	37,107,500
ROE	0.0324	0.1283	0.0320	0.1266
ROA	−0.0046	0.0375	−0.0076	0.0474
CR	8.5807	1.2657	8.1184	1.3483
CCC	55.0209	21.6628	50.6639	35.7730

OLS model for lower-than-average asset levels and liquidity's influence on profitability

Assets < average
Endogenous	Constant	CCC	lnS	Adj. R²	F-stat	N	Heteroskedasticity-corrected
ROE	−0.2268 ^***	0.00004 ^***	0.0252 ^***	0.5769	984.2930 ^***	1443	Yes
ROA	−0.0968 ^***	−0.000007 ^***	0.0114 ^***	0.0967	81.3111 ^***	1501	Yes

OLS model for aggressive strategy and liquidity influencing profitability

Aggressive strategy CR<1
Endogenous	Constant	CCC	lnA	Adj. R²	F-stat	N	Heteroskedasticity-corrected
ROE	−0.6374 ^***	−0.00004 ^***	0.0487 ^***	0.0799	19.3458 ^***	423	No
ROA	−0.3433 ^***	−0.00004 ^***	0.0249 ^***	0.7777	819.7838 ^***	469	Yes

The construction of portfolios based on determinants

Factor	Range
Aggressive net working capital strategy	CR<1
Moderate net working capital strategy	CR <1;2>
Conservative net working capital strategy	CR>2
High level of sales	S > 1,204,375 (average value for a whole sample)
Low level of sales	S < 1,204,375 (average value for a whole sample)
High level of assets	A > 2,964,799 (average value for a whole sample)
Low level of assets	A < 2,964,799 (average value for a whole sample)

OLS model for conservative NWC strategy and liquidity influencing profitability

Conservative strategy CR>2
Endogenous	Constant	CCC	lnA	Adj. R²	F-stat	N	Heteroskedasticity-corrected
ROE	0.0084	0.000001	0.0076	0.0021	1.5601	513	Yes
ROA	0.1753 ^***	0.000003 ^***	−0.0079 ^**	0.0421	12.4182 ^***	520	Yes

Mean values for portfolios related to net working capital strategies

	Aggressive strategy	Moderate strategy	Conservative strategy
No observations	509	650	573
S	1,845,840	1,468,680	340,971
A	7,131,500	15,457,106	893,946
ROE	−0.0303	0.057	0.0749
ROA	−0.1097	0.0282183	0.0577
CR	0.5874	1.41579	20.9465
CCC	7.2225	447.072	2315.95

OLS model for higher-than-average sales levels and liquidity that influences profitability

Sales > average
Endogenous	Constant	CCC	lnA	Adj. R²	F-stat	N	Heteroskedasticity-corrected
ROE	0.4132	−0.0004	−0.0181	0.0081	1.8168	201	No
ROA	0.0620	0.00006	−0.0016	0.0059	0.5885	201	No

DOI: https://doi.org/10.2478/ceej-2025-0010 | Journal eISSN: 2543-6821 | Journal ISSN: 2544-9001

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Language: English

Page range: 157 - 170

Submitted on: Dec 21, 2024

Accepted on: Apr 28, 2025

Published on: Jun 19, 2025

Published by: Sciendo

In partnership with: Paradigm Publishing Services

Publication frequency: 1 times per year

Keywords:

Related subjects:

Business and economics,

Political economics,

Economic theory, systems and structures,

Microeconomics,

Macroeconomics,

Economic policy

© 2025 Monika Bolek, published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 License.

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