2018

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Browsing 2018 by Author "Sana Mansoor"

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    Working Capital Management - Study of Cement Industry
    (UMT, Lahore, 2018) Sana Mansoor
    Abstract The management of working capital is a predominant factor to sustain and enhance profitability for the companies. Companies can accomplish optimal management of working capital making the appropriate settlement between profitability and liquidity. This research paper investigates the consequences of managing working capital to analyze its effects on company’s profitability. This study has been specifically carried out on cement sector of Pakistan, covering the most recent period of five years period from 2012 to 2016. Further study attempts to analyse the influence of working capital components on the profitability by discussing the role of these components defined as variables of the study that includes Average Collection Period, Average Payment Period, Inventory Turnover in Days and Cash Conversion Cycle. These particular variables of the study have been tested to check their relationship with the profitability of Pakistani Cement companies. Debt Ratio has been added as control variables to examine the liquidity level of the companies in relation to profitability. The study tried to find the results that help an industry in managing a firm’s working capital in an efficient way. While considering various variables of working capital management, the paper observes positive significant impact of Inventory Turnover in Days with Net Operating Profit. Whereas Net Operating Profit has strong positive correlation with Cash Conversion Cycle, whereas Average Payment Period, Average Collection Period and LN Sales are negatively correlated with profitability of a cement companies. Although it is advantageous to have such statistics but there may be some external factors which restrict the ability of management to achieve this, especially in cement sector where operating cycle is tied up with high level of work in progress.