Studying the Relationship between Liquidity Indices (traditional and modern) and the Profitability of Companies Listed in Tehran Stock Exchange Farzaneh Nassirzadeh Ferdowsi University of Mashhad Faculty of Econ.&Business Admin Department of Accounting Azadi Squ.,Mashhad,Iran Office tel.:(0098511)88-13-091 E-mail: fnasir10@yahoo.com Amin Rostami Accounting MA, Ferdowsi University of Mashhad E-mail: amin.rostami7@gmail.com Abstract The purpose of this research is to study the relationship between traditional and modern indices of liquidity with profitability of companies. Additionally the correlation between these indices is also studied. Traditional liquidity indices include current ratio and liquid ratio and modern liquidity indices include comprehensive liquidity index, cash conversion cycle index and net liquidity balance index. To evaluate the profitability it has been used the ratio of return on assets, the ratio of return on equity and the ratio of net profit margin. In this regard, 5 hypotheses were codified and multi variable regression and panel data were used. The research findings show that there is a correlation between traditional and modern indices of liquidity but this correlation is weak suggesting that the information content of these ratios are different. Thus it is recommended to use modern indices as complement. Also hypotheses testing indicated that there is a significant relationship between all traditional and modern indices of liquidity and profitability. Key words: modern liquidity indices, comprehensive liquidity indices, cash conversion cycle index, net liquidity balance index, traditional liquidity indices, and profitability. JEL Category: G3 9; G33

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