Profitability is the relationship between profits and capital (the "static" resources set aside to earn those profits). MEASURING profitability means that you have to relate a profit figure (from the Profit and LOSS Account) to a resources figure (from the Balance Sheet).

Liquidity may be defined as the ability of a FIRM to meet its FINANCIAL obligations as they fall due. The balance sheet (defined as "a structured statement of assets and liabilities")measures these resources and claims.

Profitability is the relationship between profits and capital (the "static" resources set aside to earn those profits). Measuring profitability means that you have to relate a profit figure (from the Profit and Loss Account) to a resources figure (from the Balance Sheet).

Liquidity may be defined as the ability of a firm to meet its financial obligations as they fall due. The balance sheet (defined as "a structured statement of assets and liabilities")measures these resources and claims.