Title: Working Capital Management: A Comparative study of Cement, Food and Textile Industry
Authors: Muhammad Usman Naeem
Muhammad Awais
Iram Shahzadi
Volume: 1
Issue: 9
Pages: 179-191
Publication Date: 2017/11/28
Abstract:
The purpose of this study is to analyze the Working capital requirement of different manufacturing industries of Pakistan. In this study, we examined the relationship between the working capital management and the corporate profitability of Textile, Cement, and Food/Personal Care industries to analyze the significant impact of working capital on different measures of profitability. The data was collected from Pakistan Stock Exchange’s 100-index and for this reason, we employed ten companies from every industry from 2008 to 2016 due to unavailability of data during this period. The results the food and personal care industry shows that the working capital has a negative association with both gross operating income and return on asset but takes more time to convert its inventory into sales because of the larger supply in the market. For textile industry, working capital management is working well with gross operating income, but the association with return on asset was merely significant which suggests enhancing their working capital requirements for return on asset. The cement industry has weak recovery system and also is more aggressive in working capital policy as they invest a lot in their daily requirements which decreases their profitability.