INTERDEPENDENCE BETWEEN CASH GAP AND PROFITABILITY IN THE HOTEL INDUSTRY IN CROATIA

This paper explores the interdependence between cash gap and profitability of the hotel industry in Croatia. Cash gap represents the difference between the numbers of days to sale inventory and collection of receivables on the one hand and the number of days to settle payables on the other; therefore, in this paper, the cash gap is used as a measure of liquidity. The profitability of the hotel industry in Croatia is measured in this paper by accounting profit before tax, return on total assets and return on equity. The results show that in the hotel industry in Croatia for the period 2009-2012 (a) there was no statistically significant linear relationship between the cash gap and accounting profit before tax, (b) there was no statistically significant correlation between the cash gap and return on total assets, and (c) there was no statistically significant correlation between the cash gap and return on equity.