Study of Relationship between Liquidity and Profitability of Automobile Companies Authors: Prof. Suzan D Souza, Visiting Faculty IBS Mumbai Prof. Dimple Pandey, Faculty IBS Mumbai Abstract The study is pursued to understand the relationship between the liquidity and the profitability of listed automobile companies on the NSE Nifty. Eight listed automobile companies which comprises of 16% of Nifty were considered in the study. It adopted a descriptive and inferential study using secondary data. Document analysis was the main research procedure adopted to collect secondary data for the study. The study has been conducted for the period April 2011- March 2016. The financial reports of the eight listed automobile companies were studied and relevant liquidity and profitability ratios were computed. The intension of choosing Nifty as a source as it highlights the tycoons of the specified sector whose performance indirectly influences the sectoral performance. The study climaxes the strength of liquidity influencing profitability and vice versa. Key words: Automobile companies, Profitability, Liquidity, Assets, Ratios, correlation etc. I. INTRODUCTION  LIQUIDITY MANAGEMENT is an essential factor in every organization because every organization wants to increase their profitability ( ROA and ROE ) and by using liquidity ratios like current ratio , quick ratio they can measure the corporate financial performance and liquidity position . Lot of researches have been conducted in the past on liquidity ratios and company profitability which show that how liquidity can grow or reduce their company’s profitability .Such study has been conducted on various sectors and countries in the past but first time it has been conducted on automobile sector of the eight listed companies on Nifty at NSE, which includes Bajaj Auto Limited , Bosch Ltd., Eicher Motors Limited, Hero Motor Corp Ltd. , Mahindra & Mahindra Ltd. , Maruti Suzuki India Ltd., Tata Motors Ltd. DVR and Tata Motors Ltd to find out the relationship between liquidity and their profitability. Liquidity management summarises to pay company’s short term debt obligations and secondly boost their performance and efficiency. If any company undergoes liquidity crises, it should use effective policy or strategies to resolve their liquidity problem. Companies should have sufficient cash to meet its liquidity problem. Following discussed ratios have useful approach or methodologies to define liquidity management and profitability of any company. This study helps to determine the relationship between liquidity and profitability stating on how liquidity crisis can create negative results on the company’s income and incase of a positive effect generates more income or profit for the organization.