The effectiveness of liquidity management and business survival: A case study of listed companies in the Stock Exchange of Thailand, Agricultural and Food Industry Group

Abstract

The objective of this study was to examine the relationship between the efficiency of liquidity management and business survival in the food and beverage industry listed on the Stock Exchange of Thailand. The data collection method utilized secondary data from the Stock Exchange of Thailand, including financial statements and annual reports (Form 56-1) for the fiscal years ending December 31, from 2021 to 2023, covering a period of three years. Financial indicators calculated were Current Ratio (CR), Quick Ratio (CRQ), Cash Flow Liquidity, Return on Assets (ROA), Return on Equity (ROE), and Net Profit. The data was analyzed using descriptive statistics, correlation analysis, and standard multiple regression analysis to evaluate the relationship between liquidity management and business survivability.

The research findings revealed that the efficiency of liquidity management, as measured by financial indicators, has a positive relationship with business survival. Specifically, Cash Flow Liquidity was found to have the highest influence on business performance, with a regression coefficient for ROA of 3.45 (p-value = 0.005) and for ROE of 5.78 (p-value = 0.01), which were significantly higher than other variables. A Quick Ratio (CRQ) in the range of 1.2–1.5 positively impacted ROA and ROE, while the Current Ratio (CR) showed no statistically significant impact (p-value > 0.05). Furthermore, CRQ and Cash Flow Liquidity were correlated at 0.51 (p < 0.01). A comparative analysis of the sample groups revealed significant differences: companies with Cash Flow ≥ 0 had an average ROA of 8.10% and ROE of 11.20%, which was significantly higher than the group with negative cash flow (ROA = 1.25%, ROE = -5.40%). Additionally, companies with a high CR (> 1.5) had an average net profit of 9.87 million THB per year, whereas companies with a low CR achieved only 1.98 million THB. Based on these findings, organizations should establish a Cash Flow Liquidity threshold of at least 0.4 and adopt digital technology for proactive liquidity management. They should also maintain a Quick Ratio of 1.2–1.5 to enhance competitive advantage and business flexibility.