Corporate liquidity in normal and crisis times: what is the best yardstick?


  • André Bastiaan Dorsman VU University Amsterdam
  • Wim Westerman University of Groningen, The Netherlands



cash, working capital, cash conversion cycle, crisis, liquidity measures



Aim: This paper is meant to investigate measures that help to assess corporate liquidity in both normal and crisis periods.

Design / research methods: We provide an overview of relevant liquidity measures used by both professionals and academics, apply regular liquidity measures on three major European electricity suppliers, study three local cases to find out how a recent crisis affected liquidity and provide an overview of liquidity management on 27 electricity, oil/gas and other multinational firms.

Conclusions / findings: Liquidity measures concentrate on cash ratios, working capital ratios and in specific the cash conversion cycle (CCC). It appears to matter whether a company is production driven or sales driven. In crisis times, whereas priorities do change, liquidity measures should not.

Originality / value of the article: We plead for keeping a close eye on the CCC in both good and bad times. The article provides various recommendations to academics and practitioners.


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