WORKING CAPITAL MANAGEMENT AMONG LISTED COMPANIES OF PAKISTAN

Waqar ul-Hassan; Mohsin Zubair; Zeeshan Hasnain; Shahbaz Hussain

doi:10.29121/granthaalayah.v5.i2.2017.1705

Authors

Waqar-ul-Hassan Institute of Banking & Finance, Bahauddin Zakariya University (Multan)Pakistan
Mohsin Zubair Department of Management Sciences, National University of Modern Languages (Multan) Pakistan
Zeeshan Hasnain Institute of Banking & Finance, Bahauddin Zakariya University (Multan)Pakistan
Shahbaz Hussain Faculty of Management & Economics, Dalian University of Technology, China

DOI:

https://doi.org/10.29121/granthaalayah.v5.i2.2017.1705

Keywords:

Working Capital Management, Firm Performance, Panel Data Analysis

Abstract [English]

The study aims to investigate the strength of working capital management for measuring the financial performance of listed stocks. The study incorporates descriptive statistics, Pearson correlation, and multiple regression models for interpretation and execution of data. Five years (2006-11) panel data of 125 listed companies of Pakistan stock exchange (PSX) is selected in accordance to sample selection criterion. Results of regression analysis supported an inverse relationship between firm`s profitability and working capital management. Return on asset and Gross operation income are taken as indicators of profitability. Inventory turnover in days, Average age of A/R, Average payable period and Cash conversion cycle are considered as independent variables to measure firm’s profitability. Firm size, Sales growth, and financial debt ratio are favored as control variables. Overall Return on asset models indicated poor values of R-square`s and Gross operating income models showed robustness.

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