Abstract

Liquidity as a measure of payment capacity must incorporate the attributes of efficiency, sustainability and synergy. Traditionally, liquidity is measured by financial indicators, centered in the current ratio (CR) as an indicator of nominal payment capacity. However, this indicator generates a gap in the liquidity assessment because it does not measure financial efficiency nor liquidity sustainability. This research paper proposes an indicator that combines nominal capacity with effective payment capacity that indicates the liquidity sustainability and financial efficient status, addressing a gap in the literature concerning liquidity management, and revealing the existence of financial synergy. In order to test this proposition, data from financial statements of 37 manufacturing firms from 2000 to 2015 were used, via parametric and nonparametric methods. In the analysis showed here, financial efficiency ratio (FER) and the liquidity sustainability ratio (LSR) were used to assess financial efficiency and sustainable liquidity. Robust empirical evidence was found showing that the main status of the firms’ liquidity is weakly sustainable and therefore does not produce financial synergy. The results suggest that the combination of financial efficiency and nominal liquidity is a robust technique to indicate the firm’s liquidity status.

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