International Journal of Management and Enterprise Development 6, No. 4 (2009): 479-493

 

DYNAMIC AND STATIC CORPORATE LIQUIDITY MEASUREMENT: A CASE OF MALAYSIAN SMALL AND MEDIUM ENTERPRISES

 

Nor Balkish Zakaria

 

Abstract

The survival of Small and Medium Enterprises (SMEs) is so vital to stimulate the healthy business and economics maintenance. Based on the interest of enterprise development and financial performance, together with relationship between measurements of corporate liquidity, this study addresses the issue of examining the relationship between earnings, cash flow and corporate liquidity in Malaysian SMEs. The findings in this study imply that both earning and cash flow can be used to provide corporate liquidity information in small and medium businesses in Malaysia according to dynamic measurement of corporate liquidity. Anyhow, the static measures represented by the current ratio and quick ratio did not show any significant relationship with corporate liquidity. This study will pave the way to enhance the governance in the management of corporate liquidity SME.

Keywords: cash flow, dynamic corporate liquidity measurement, enterprise development, SMEs, small and medium-sized enterprises, static corporate liquidity measurement, earnings, Malaysia