Summary – Profitability vs Liquidity. The difference between profitability and liquidity is simply the availability of profits vs availability of cash. Profit is the principle measure to assess the stability of a company and is the priority interest of shareholders. Know short-term and long-term asset management ratios to control working capital and the firm's liquidity. II. Working Capital Management. Working capital management examines the relationship between short-term assets and short-term liabilities. The process oversees control of the firm's cash, inventories, and accounts receivable/payable.

Liquidity is a measure of the cash and other assets banks have available to quickly pay bills and meet short-term business and financial obligations. Capital is a measure of the resources banks have to absorb losses. What is the difference between liquidity and liquidation? Liquidity usually refers to a company's ability to pay its bills when they become due. Liquidity is often evaluated by comparing a company's current assets to its current liabilities.