Proceedings of 28th International Business Research Conference 8 - 9 September 2014, Novotel Barcelona City Hotel, Barcelona, Spain, ISBN: 978-1-922069-60-3 Leverage and Liquidity of Latvian Companies: The Way through Crisis Anželika Berķe-Berga and Inna Dovladbekova Objective: We conducted a survey to find out how Latvian companies have survived during the severe economic crisis. Our goal was to look at financial reports of companies operating in four industries: manufacturing, building, transporting and storage, and information and communication. Data and methods: The general set (number of companies in the above mentioned industries) was 16 130 companies, and we random-selected 381 companies for our survey. We analysed the data mainly from the balance sheets and profit and loss statements, and we calculated the financial ratios (leverage and liquidity ratios). The research period was 6 years – from 2007 to 2012. We did the analysis of descriptive statistics and correlations using IBM SPSS Statistics 20. Results and conclusions: The main findings about the tendencies during the crisis for companies in all four industries were: 1) Decline of amount of sales and net profit, from which companies have not recovered yet; 2) Negative owner’s equity position during years 2009 and 2010; 3) Main sources of financing during crisis were current liabilities and owner’s equity; st 4) The liquidity ratios of companies in the 1 quartile have decreased and it was th lower than normal during all the period. The companies of the 4 have done much better – they have improved their liquidity after the crisis and it has been in norm all the time. When analysing separate industries, we discovered that manufacturing companies have reduced their long term debts during the crisis. Analysing liquidity – the current ratio has been stable during the period, but the acid-test ratio has weakened during the crisis and reached the minimum of the norm (1) only in 2012. The companies from building industry have suffered the most – we see decrease of assets and liabilities, the liquidity has been low. Building companies have increased their short term liabilities during the crisis. Since 2011 they try to reduce them. In transporting and storage companies have increased their debts during the crisis and after it. The equity ratio has exceeded 2 points which means that the debts of companies exceed 50%. The liquidity has decreased under the norm and reached it only in 2012. The information and communication companies have reduced owner’s equity and long-term liabilities, but increased the current liability amount. They have maintained stable liquidity during all the period. Keywords: economic crisis, leverage ratios, liquidity ratios ________________________________________________ Dr.oec. Anželika Berķe-Berga, Riga Stradiņš University, Latvia. Dr.oec, Prof. Inna Dovladbekova, Riga Stradiņš University, Latvia.