IMPACT OF COVID-19 ON WORKING CAPITAL MANAGENMENT OF BIG 5 TEXTILE COMPANIES IN PAKISTAN

Abstract

Working capital management assumes a significant part in achievement and disappointment of firm in business due with its impact on firm’s profitability as well as on liquidity. Working Capital means those ready funds which are important for the working of any type. The working capital turnover depends upon the current assets and current liabilities and majorly driven from inventories, receivables, payables and short-term borrowings. Working Capital Management is the main and most important factor to maintain liquidity, profitability, solvency and existence ofthe organization. This report aims to explore the impacts of the COVID-19 pandemic on working capital management among firms operational in Pakistan. The review is in light ofsecondary information gathered from firm’s annual reports for the time of 2017-2021 (Before and after effects ofCovid) to find that how companies change their working capital management from COVID year to preceding year. The study comprises of 5 companies that are catering export and local markets both to variable extents. A decent board dataset covering 5 textile firms for the period 2017-21 were analyzed with an effort to explore firms Working Capital Structure before and after Covid effects. The results showsthat all ofthese companies have witnessed increase in sales from 2020. Working capital requirements of textile companies in Pakistan has been increased significantly after COVID-19 due to increase in aggregate demand, human, consumption behavior of the people, depreciation ofdollar, increase in discount rate and COGS has increased after COVID-19.Various opportunities have created for export industries ofPakistan like US-China trade rift and due to this working capital will be the core requirement for companies and if same trend will continue in future, the working capital management will become a major challenge for textile companies