What is the difference between profitability and liquidity?
Dear Student,
1) Profitability of a business refers to the excess of its revenue over its expenditures. It is the key reason for operation of any business.
Fixed Asset affect the growth of profitability of the business.
Gross ratio, Net Ratio, Operating ratio are some of the ratios used to calculate profitability of the business.
2) Liquidity of a business refers to the amount available to it in the form of cash and other liquid assets including bills receivables, certificate of deposit etc.
Current asset affect the liquidity of the business.
Current ratio, Liquid ratio, cash debt coverage ratio are some of the ratios used to calculate liquidity of the business.
Regards
1) Profitability of a business refers to the excess of its revenue over its expenditures. It is the key reason for operation of any business.
Fixed Asset affect the growth of profitability of the business.
Gross ratio, Net Ratio, Operating ratio are some of the ratios used to calculate profitability of the business.
2) Liquidity of a business refers to the amount available to it in the form of cash and other liquid assets including bills receivables, certificate of deposit etc.
Current asset affect the liquidity of the business.
Current ratio, Liquid ratio, cash debt coverage ratio are some of the ratios used to calculate liquidity of the business.
Regards