Effects of Liquidity Ratio on Profitability of Quoted Food and Beverages Firms in Nigeria

The study examined the relationship between Liquidity ratio and firm’s profitability. In order to achieve the objectives of the study, an ex-post facto research design was adopted. Population of study consisted of all firms in the food and beverage industry. The research data were from secondary sources. A sample was obtained from the annual reports of five (5) firms in the industry from 2012 – 2021 and then analyzed.. A panel data multiple regression analysis was adopted using SPSS (Version 20.0) statistical model. Findings revealed that current ratio has a positive significant relationship with return on assets and quick ratio also has a positive significant relationship with return on assets. The study concluded that there is an overall positive relationship between Liquidity ratio and firm’s profitability. The study recommended amongst others that, the management should give consideration to current ratio, quick ratio (liquidity management in terms of its current assets and current liabilities) and inventory management to maintain their profitability and achieve their target profitability in the future.