Answer to Question #185314 in Management for Alex Baraka

Question

Briefly explain the liquidity – profitability trade – off which a business enterprise may be required to consider in its financial management policies.

Answer 1

Liquidity profitability simply involves to efficiently manage current assets and liabilities in order to achieve maximum profits. A business enterprise may be required to identify an opportunity cost. An opportunity cost is vital in liquidity and profitability in that it enables the company to thrive in what has the most value thus maximize profit.