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

Abstract This article examines the relationship between financial liquidity and profitability among non-financial companies listed on the Warsaw Stock Exchange (WSE), exploring the factors that influence this dependence, such as net working capital strategy, sales volume, and asset levels. To achieve this, companies were categorised into portfolios based on their working capital strategy, sales volume, and asset levels. Correlation and regression analyses were then conducted within each portfolio to identify variations in the liquidity-profitability relationship across these categories. The research reveals that the relationship between financial liquidity and profitability is not uniform, demonstrating that it varies significantly depending on a company's net working capital strategy, sales volume, and asset level. These observed differences across portfolios highlight the specific factors that shape this relationship. The findings support the applicability of theoretical assumptions regarding the liquidity-profitability relationship to the specific context of the surveyed non-financial companies listed on the WSE. However, the study's focus on publicly listed companies on the WSE excludes private companies, which may exhibit a different liquidity-profitability relationship.