Literature review of factors relating to liquidity stress - extended version
Liquidity ratios are an important class of financial metrics used to determine a debtor's ability to pay off current debt obligations without raising external capital. Liquidity ratios measure a company's ability to pay debt obligations and its margin of safety through the calculation of metrics including the current ratio , quick ratio , and operating cash flow ratio. With liquidity ratios, current liabilities are most often analyzed in relation to liquid assets to evaluate the ability to cover short-term debts and obligations in case of an emergency. Liquidity is the ability to convert assets into cash quickly and cheaply. Liquidity ratios are most useful when they are used in comparative form. This analysis may be internal or external. For example, internal analysis regarding liquidity ratios involves using multiple accounting periods that are reported using the same accounting methods.
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Visit for more related articles at Journal of Internet Banking and Commerce. This purpose of the research was directed to review the trade-off among liquidity and profitability in the banking sector. The research was applied to all listed banks of Pakistan Stock Exchange during the time period of Document investigation was the key research method adopted to gather secondary data for the research. The observed outcomes exposed significant connection among bank liquidity ratios and return on assets, return on equity, net profit margin, and Tobin q.