IMPACT OF WORKING CAPITAL (LIQUIDITY NEXUS RATIO) ON PROFITABILITY EVIDENCE FROM MANUFACTURING SECTOR OF PAKISTAN (COMPARATIVE ANALYSIS)
The purpose of this study is to empirically investigate the impact of WCM on Profitability for a sample of 30, Cement and Sugar industries that are listed on the Pakistan Stock Exchange (PSx). This research will expand the horizon of knowledge and comparative analysis of the manufacturing sector (Cement and Sugar). Data is secondary in nature while the time of the study is 2014-2018. STATA software is used to measure the effect. in this research, NPM is taken as dependent variables and WCM independent which is measured by liquidity ratio while Size of Firm is taken as a control variable. The key finding of analysis shows that CR has a positive and significant effect on profitability in both sectors. However, CCC has a negative and significant but positive and insignificant effect on profitability in both sectors. iTR has a positive and insignificant effect on Profitability, Size has a positive and significant effect on profitability in both sectors. The final discussion comprehends that increase in CCC leads to decrease in Profitability, while the decrease in CCC leads to increase in Profitability. The quicker the firm converts its assets into liquidity the better the firm will assume profitability. it concluded that profitability can be enhanced if the industry manager manages its working capital more efficiently. At last test equality of matched pairs was applied to measure the trend effect which shows that both industries have the different operation, techniques and infrastructure, which has a significant difference between firm variables and iTR has an insignificant effect. Which show that both industries have the same mean of inventories Turnover.
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