A Review of the Relationship between Cash Conversion Cycle and Manufacturing Firm’s Operating Efficiency in Pakistan

Abstract

This study has the aim of explaining the relationship between cash conversion cycle and operating efficiency of the manufacturing sector firms in Pakistan. For this review of different research papers have been selected which have been written in different contexts in different economies. Almost all of them have selected cash conversion cycle along with other measures of the liquidity of firms and have examined its impact on the profitability and operating efficiency of the manufacturing sector firms in different countries with a lot of variation in results. Some of them have found significant positive others negative relationship between measures of the liquidity and performance of the firms. This review has compared the methodology and results of these studies.

Keywords: Cash conversion cycle, operating efficiency, working capital, liquidity