Abstract:
The combination of liquidity variables and capital structure variables has been always a major concern for the financial managers in different companies. The present study attempts to analyze the relationship between liquidity and profitability and investigate the impact of financial leverage and liquidity on the financial performance of select pharmaceutical companies for the period from 2006-07 to 2015-16. The results of the study show that the liquidity of the companies which is reflected in the ongoing ability to pay financial obligations, affects the firm's capital structure. The increase in liquidity of the firm leads to decrease in the leverage and vice versa. However, no significant impact of leverage on profitability and capital structure is evidenced in the present study.
