MS Banking and Finance

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Browsing MS Banking and Finance by Author "Arslan Baig"

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    Impact of Working Capital Management and Firm’s Profitability
    (UMT, Lahore, 2018) Arslan Baig
    The main goal of this study is to examine the relationship between working capital management and profitability. This study has been exclusively conducted on food and personal care sector of Pakistan, study covers the past 11 years starting from 2008 to 2018 and data is collected from the financial statements. Along with the comprehensive impact of working capital management on profitability, this study divided the period of research into most recent two democratic regimes. Further study used Inventory Turnover in Days, Average Collection Period, Average Payment Period, and Cash Conversion Cycle as a comprehensive measure of working capital management. These components of the study have been tested to check their relationship with the profitability (measured by ROA) of food and care sector. Liquidity ratio and current ratio has been used as control variables to examine the liquidity level of firms in relation to the profitability. Descriptive statistics, Correlation Analysis and Multiple Regression Analysis have been used to test the relationship. The study found significant negative impact of inventory turnover, average collection and cash conversion cycle whereas the research found insignificant negative relationship of average payment period with the profitability. Moreover, study concluded that results of regime wise regressions are not the same. Finance managers can enhance profitability by keeping in view the existence of such type of relationship. Although it is advantageous but there are some external factors involved which restrict the management in achieving this goal.