Abstract:
The objective ofthis study is to look at the impact of working capital policies on the
financial performance of textile sector. The study utilizes the return on assets as a
measure of financial performance. The investment policy of working capital
management is determined by calculating the current assets to total assets ratio, while
the financing policy is determined by calculating the current liabilities to total assets
ratio. Additionally, other factors such as the quick ratio, debt to equity ratio, are
included in the analysis. Secondary data from 5 textile weaving listed firms on the
Pakistan Stock Exchange over a ten-year period (2013-2022) are used to calculate
these variables. The results of the regression analysis indicate that more aggressive
working capital management policies negatively associate with financial
profitability. Besides, QR and DER show a positive relationship with ROA. Given
that the textile sector is a major industry in Pakistan, it is crucial to give careful
attention to asset and liability management. According to the findings of this study,
maintaining an effective level of working capital is crucial for the textile industry and
also for other company sectors. Hence, this study concluded that the working capital
is the key part for the success ofthe companies.
