An Analysis of the Relationship between Financial Liquidity and Profitability of Agriculture and Food Industry Groups Listed on the Stock Exchange of Thailand

Abstract

The objective of this study was to analyze the relationship between financial liquidity and profitability of companies in the agriculture and food industries listed on the Stock Exchange of Thailand. The study was divided into two sectors: the agriculture business sector and the food and beverage business sector. The research utilized accounting data from the financial statements of continuously operating companies during the period of 2020–2023, comprising a total of 46 companies and 184 data sets. Data analysis employed descriptive statistics, Pearson correlation, and multiple regression analysis.

          The findings indicated that in the agriculture business sector, Average Inventory Turnover Period had a positive effect on Return on Equity, reflecting efficient inventory management. Meanwhile, Days Payable Outstanding positively influenced Return on Assets and Net Profit Margin but negatively affected Return on Equity, indicating effective short-term capital turnover but adverse impacts on shareholder equity in the long run. In the food and beverage business sector, Quick Ratio tended to have a positive impact on Return on Assets and Return on Equity, although not statistically significant, reflecting the ability to maintain liquidity. Conversely, Average Collection Period negatively affected Return on Assets and Return on Equity, indicating suboptimal receivables management. Average Inventory Turnover Period negatively influenced Net Profit Margin, reflecting high storage costs, while Days Payable Outstanding negatively impacted Return on Assets, signifying excessive extension of payment periods. This study underscored the significance of appropriate liquidity management in enhancing profitability potential. The results highlighted that liquidity factors influenced profitability differently across industry types.