Essay from the year 2014 in the subject Economics - Finance, , language: English, abstract: The subject of the relationship between theory and practice has long been focused by psychologists as to what extent theories can be used as the principles that guide practice. A theory has a fundamental role in providing researchers with frameworks and in guiding practitioners to formulate a problem in actual practice settings. This paper is divided into four sections. The first section explores the literature review of the relationship between theory and practice. The second section illustrates the short-term liquidity measurement theory in the context of how the theory can be translated into practice. In the third section of this paper, the researcher discusses the connections between the theory described and related applications. The fourth and concluding section outlines some recommendations.Bio: Alaa Mostafa received a Ph.D., in finance from Newford University in 2014. He also has an M.B.A, from Aspen University in 2005, and B.S., from Ain Shams University in 1986. Dr. Alaa Mostafa is an Associate Member of American Institute of Certified Public Accountants (AICPA) and holds a CPA designation which is conferred by California State Board of Accountancy, USA. Dr. Alaa Mostafa is a practitioner in the financial and business realm, specializing in managing and maintaining positive financial and strategic management conditions within domestic and multinational organizations, especially in critical situations and crises. Dr. Alaa Mostafa has been a lecturer for CPA and CMA professional certificate courses at top educational institutions. He has conducted and demonstrated extensive researches on financial analysis methods, especially on short-term liquidity measurement. Education: Ph.D., Finance, Newford University (USA), M.B.A., Aspen University (USA), and B.S., Accounting, Ain Shams University (Egypt).