Liquidity Management in Maharatna Central Public Sector Enterprises in India After the Liberalization Period: A Study of Powergrid

Abstract

Liquidity is a major concern for any business that wants to stay in business. Any company’s entire life and existence depends on its access to liquid resources. Adequate liquidity is always desirable for smooth business operation. It should be neither excessive nor inadequate. Having adequate liquid assets in the hands of a business to meet the firms current and futures obligations is essential for the heath of the business firm while when a company has too much liquidity, it builds up a lot of unused resources that don’t make any money for the company. When a company has too little liquidity, it slows down business operations, which hurts the company’s overall earnings. The key objective of managing short- term debt paying capability is to ensure the business must hold adequate amount of liquid resources to pay off its short term debts. In order to maximise value creation for shareholders, customers, employees, and the company itself, sound management of liquid assets must be an integral part of the business’s entire strategy. The efficiency in managing liquidity of a firm directly influences the overall profitability of the firm. Thus considering the stiff competition that exists in present market, measuring liquidity and examining the impact of efficient management of liquid assets on the capacity of a business to generate is essential to investigate the managerial efficiency and excellence. The preceding analysis analyses the patterns in the liquidity of the company selected for the study, as well as the consequences of efficient management of liquid assets on the firm’s overall profitability.