Liquidity and Financial Sustainability in Malaysian Universities: A Case Study of UnIPSAS

Abstract

This study analyzes the liquidity status of Universiti Islam Pahang Sultan Ahmad Shah (UnIPSAS) from 2018 to 2022 to assess the financial resilience of Malaysian higher education institutions (HEIs). Although financial sustainability has become increasingly important for HEIs, empirical evidence based on internal audited financial data remains scarce in Malaysia, particularly at the institutional level. To address this gap, the study adopts a quantitative approach using time-series trend analysis to examine five liquidity indicators: the current ratio, quick ratio, accounts receivable turnover (ART), working capital, and cash ratio. The results show that liquidity improved from 1.48 in 2018 to 2.68 in 2022, indicating a stronger short-term financial buffer. However, the ART ratio declined sharply to 0.62 in 2022, signalling substantial inefficiencies in student fee and sponsorship collections. These findings suggest that prolonged cash conversion cycles may pose risks to operational cash flows despite improved liquidity. This study contributes institution-level evidence derived from audited data and highlights the critical role of receivables management in supporting financial sustainability in HEIs. The study recommends the adoption of digital payment systems and automated receivables monitoring to enhance cash flow efficiency. Future research should incorporate solvency and efficiency measures, qualitative perspectives on financial governance, and a broader range of institutions to provide a more comprehensive assessment of financial sustainability in higher education.