Abstract:
Purpose
The thesis will provide an insight to all stake holders regarding working capital management.
It intends to validate previous work and provide the current years analysis in the field of
working capital. It will highlight impact of working capital on profitability and focuses on the
Non-financial companies listed on K.SE-100 Index. The thesis will highlight it’s essentiality
by showing the relationship of variables with firm’s profitability.
Research Methodology
The thesis consists of conceptual framework followed by empirical analysis of data. The
study correlates the relationship of working capital variables i.e. CCC, APD, ARD, ITID and
CR, LOS with operating profitability of firms. Beside it descriptive statistics, Pearson’s
correlation coefficient and multiple regression (OLS) methods are applied at time series and
cross sectional data of 30 Non-financial listed companies. It will cover analysis for the period
of 2008 till 2012.
Findings
After applying the equation in E-views software, it concludes that there is direct linkage of
firms’ operating profitability with Accounts payable in days, Inventory turnover in days and
size of firms, whereas Cash conversion cycle, Accounts receivable in days and Current ratio
are negatively correlated with operating profitability of firms.
Furthermore Pakistani firms can enhance its operating profitability by reducing receivable
period and extending the payable period of companies, keeping in view liquidity of
companies. The thesis will broaden the horizon of effective management of working capital
in context of Pakistan.
