Abstract:
This study examines how efficient inventory management affects the financial performance of
pharmaceutical firms in Pakistan, specifically analyzing Inventory Turnover (IT) and Inventory
Days (ID) as key indicators and their relationships with Return on Assets (ROA) and Return
Equity (ROE). Adopting a secondary quantitative approach, the research uses panel data from
seven pharmaceutical companies (2015-2025), analyzed through Pearson correlation and Ordinary
Least Squares (OLS) regression to identify the impact of inventory practices on profitability. The
findings reveal that higher IT is positively and significantly associated with ROA, suggesting that
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quick inventory turnover enhances asset efficiency and profitability in the sector. However, IT and
ID do not have significant effects on ROE, indicating that shareholder returns are influenced more
by broader financial and strategic factors beyond operational inventory management. These results
highlight the operational relevance of inventory metrics while pointing to the limited impact
equity-based performance. The study contributes to bridging the research gap on data-driven
inventory practices in Pakistan’s pharmaceutical industry and offers practical insights for
managers and policymakers seeking to balance inventory efficiency with profitability in a highly
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regulated and competitive sector.
