Impact of Leverage, Efficiency and Liquidity on Financial Performance in Textile Industry

Abstract

This study has focused mainly on identifying the impact of leverage, efficiency and liquidity on financial performance in textile industry in Pakistan. This study has considered leverage, efficiency and liquidity as independent variables. Whereas, financial performance has been considered as the dependent variable. However, textile industry in Pakistan has been the sector chosen for this study. The major emphasis in this study has been on assessing the relationship between leverage, efficiency and liquidity (independent variables) and financial performance (dependent variable) in textile industry in Pakistan. Secondary sources of data (annual financial statements) have been used for data collection regarding variables of this study from the period of 2014 – 2019. A sample size of 60 observations has been finalized to represent the entire population (textile firms of Pakistan). Collected data has then been analyzed through statistical instruments such as correlation and regression by using Stata software to explore the impact of each variable in this study. Based on the findings, it has been concluded that leverage, efficiency and liquidity have significant impact on financial performance in textile industry in Pakistan. Conclusively, it has been proved that change in leverage, efficiency and liquidity brings a definite change in financial performance of textile industry in Pakistan.