Impact of Working Capital Management on Firm Profitability in Textile Industry of Pakistan

Abstract

This study shows the link between the working capital management and the firm’s profitability Current Ratio and Cash Conversion Cycle are studied under Working Capital Management head and Return on Asset & Net Profit Margin is studied under the Profitability head. These relationships are studied under the context of Pakistan textile industry for which we have taken their financial information of the data period from 2006-2012, as this research was based on secondary data. The convenience sampling technique is used for the selection of sample of our study which consists of 6 textile firms. The different descriptive statistics, correlation coefficient and regression of all variables are computed to confirm our hypothesis through IBM and SPSS Software. From data analysis we have conclude that the CR, CCC and NPM, ROA has a negative relationship with each other. The regression results showed that the model is fit for research. The importance of research is given in paper.

Keywords: Working Capital Management, Current Ratio, Cash Conversion Cycle, ROA, NPM