Influence of liquidity on financial profitability: The case of the Goodyear S.A. Company

Abstract

The analysis of financial indicators provides information to evaluate the economic stability of a company; this study determines the influence of liquidity on the financial profitability of Goodyear del Peru S. A within the period from 2012 to 2018. Quantitatively, under the multiple regression model, it is explained retrospectively and transversally from a total of 28 financial statements, how the ratios of current ratio, cash ratio and working capital, converge on the ratios of return on investment, financial leverage and net profitability. It was determined that return on investment and financial leverage depend on liquidity; however, although liquidity is related to net profitability, it was not found to be a significant enough factor to be a determining and influential one, since the company's fund is mostly made up of assets required for loans. It is concluded that liquidity is a determining and influential factor for the financial profitability at the level of investment return and leverage of the company, through the use of the method of integration by components and regression, since it allowed for independently delimiting the accuracy of the margin of error for each ratio, which results in a favorable significance.