Impact of Liquidity on Technical Efficiency of Automobile Firms in India

Abstract

Liquidity and efficiency run concurrently and are critical from the standpoint of any firm. Liquidity ensures smooth running in the short term and efficiency help for the future growth of the firm. This research examines liquidity and technical efficiency of selected automobile firms in India. This study's objectives are to ascertain the company's liquidity and technical efficiency as well as to investigate the relationship between the two during a ten-year period, from 2015 to 2024. The top four companies of Indian automobile Industry namely, Maruti Suzuki, Tata motors, Mahindra & Mahindra, Hyundai Motor India have been selected based on market share and sales volume. The statistical approaches used for the liquidity and technical analysis including arithmetic mean, standard deviation, variance, and panel data regression.  Efficiency as a representation of technical efficiency (output oriented) is determined using the data envelope analysis approach. DEA measure technical efficiency of selected automobile firms as per CRS and VRS approaches.  According to the study, technical efficiency and liquidity do not significantly correlate. This study helps to understand the relationship between liquidity and technical efficiency of the selected enterprises in Indian automobile industry, helping them to make significant financial decisions.