Analysis of the dynamics of interaction between profitability and liquidity using a predator-prey model approach
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Date
2024-04Author
Jamal, Sri Wahyuni
Suparno, Suparno
Fauziah, Fenty
Rashid, Umi Kartini
Latief, Azhar
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Show full item recordAbstract
Profitability and liquidity are among the critical issues that must be studied and
considered by the management of every organisation as their foremost task. This
research aims to analyse the bidirectional dynamics of profitability ratios and
liquidity ratios over time. This research also aims to present forecasted values of
profitability and liquidity for the next five years. The data used in this study are
obtained from the annual reports of PT. Indofood for the period 2011-2022. This
research adopts a predator-prey model containing a pair of non-linear differential
equations to describe the interaction between two species. The results of this study
show that the predator-prey model can explain the bidirectional dynamics of
profitability ratios and liquidity ratios with high accuracy. Besides, this study
indicates that the type of relationship between profitability and liquidity is predator prey. The forecasting results show that for 2023-2027, both profitability and
liquidity tend to decrease. Based on the data, the company’s profitability and
liquidity dynamics periodically fluctuate over time. This indicates a positive sign
for PT. Indofood's profitability and liquidity are in good condition. In the future,
the company has to take preventive measures to continue stabilising its profitability
and liquidity.