The purpose of this paper is to measure/assess the link between short-term solvency and operational efficiency of
selected cement companies in India. The researcher has collected, compiled and analysed publicly available data.
The data for the study are different financial ratios. Short-term solvency of the sample companies is measured from
the current ratio whereas operational efficiency is accessed from P ratios. These ratios are collected from the
Annual Reports of selected companies over the period 2003 to 2012. Descriptive as well as inferential statistical
tools are used to draw conclusions. The result suggests that the liquidity and profitability of the sample companies
are not uniform and the association between quick ratio and operational efficiency is negative. The study depends
more on empirical procedures rather than a theoretical justification. The research is totally based on publically
available information and limited with regard to the time span and sample size. No holdout sample has been used.
The entire data set is subjected to simple statistical analysis. This to some extent limits the findings and implications.
Profitability and liquidity give importance on two different aspects. Liquidity gives importance on holding a huge
investment in liquid assets whereas profitability suggests a low level of investment in liquid assets. Simply the
managers have to make a trade-off between these two decisions for the smooth running of the business. The
present study focuses on two issues - does the increase in profitability affect the liquidity of an organisation? Are
these ratios of companies in the same industry similar?

w Deloof. M. (2003). “Does Working Capital
Management affects Profitability of Belgian Firms?”.
Journal of Business Finance & Accounting, 30 (3 &
4), pp. 573-587
w Dong. H.P and Su. J. (2010). “The Relationship
between Working Capital Management and
Profitability: A Vietnam Case”, International
Research Journal of Finance Economy 49 pp. 59-
67
w Gill A, Nahum B, Neil M (2010). “The Relationship
between Working Capital Management and
Profitability: Evidence from the United States”. Bus.
Econ. J. pp. 1-9
w Gopinathan. T. (2009), “Financial Ratio Analysis for
Performance Check: Financial Statement Analysis
with Ratios Can Reveal Problem Areas”. Journal of
financial ratio analysis for performance evaluation.
Retrieved from hv. diva portal.org/smash/get/
diva2:323754/FULLTEST01
w H. W. Collier., T. Grai., S. Haslitt., C. B. McGowan.
(2004) “An example of the use of financial ratio
analysis: the case of Motorola,” Decision Sciences
Institute Conference, Florida, 2-6 March 2004, pp7-
13. Collected from Research Online is the open
access institutional repository for the University of
Wollongong on 31st July 2014
w Ibam, (2008). How to Evaluate a Company before
Investing. Stock Exchange News Sat. 22 March
2007 (Online: freemanskrikesblogspot.com/…/howtoevaluate-
company-be) Retrieved on 19th January
1014
w Jamali. A. H. and Asadi. A. (2012) Indian Journal of
Science and Technology Vol. 5 No. 5 pp. 2779-
2781
w Jamali. A. H. and Asadi. A. (2012) Indian Journal of
Science and Technology Vol. 5 No. 5 pp. 2779-
2781
w James. C. (2009), “Accounting 101 – Income
Statement: Financial Reporting and Analysis of Profit
and Loss”, Journal of income statement. Retrieved
f r o m h t t p . / / e n . w i k i p e d i a . o r g / w i k i /
International_Financial_Reporting_Standrds
w (2009), “Basic Accounting 101- Asset Turnover
Ratio: Inventory, Cash, Equipment and Accounts
Receivable Analysis”, Journal of asset turnover
ratio
w Jo. N. (2009), “Inventory Analysis: A Guide to
Analyzing Inventory for Small Business Owners”,
Journal of inventory analysis. Retrieved from divaportal.
org
w Karaduman. H.A., Akbas. H.E., Ozsozgun. A.,
Durer. S. (2010). “Effects of Working Capital
Management on Profitability: The Case of Selected
Companies in the Istanbul Stock Exchange (2005-
2008)”, International Journal of Finance Study. 2(2):
pp. 47-54
w Mtetwa, M. (2010), “Fixed Assets: Capital
Expenditure”, Journal of fixed assets in accounting
Srusti Management Review, Vol -X, Issue - I, January-June 2017 29
w Okwo. et.al., (2012), “Investment in Fixed Assets
and Firm Profitability: Evidence from the Nigerian
Brewery Industry” European Journal of Business
and Management, Vol 4, No.20, pp. 10-17