Abstract:
Purpose: To investigate the impact of working capital policy on Karachi cement firms’
profitability.
Design / Methodology / Approach: E-views software has been used to explore the impact
of WCM on profitability of cement firms. Descriptive Statistics, Correlation and
Regression Analysis is used in this study. To examine the impact, E-views regression
analysis - Panel Least Square Method is used on 10 years’ data from 2008-2017 of Karachi
cement companies that are listed on Pakistan Slock Exchange. WCM policies are analysed
through Investment and financing policies that are considered independent variables along
with firms' size, sales growth and financial debts. Profitability is measured through Net
Operating Profitability, ROA and ROE. To analyse the impact of each individual, fifteen
hypotheses are developed.
Findings: The study's objective is to examine the impact of WCM and Karachi cement
firms' profitability. Profitability is measured through NOP, ROA and ROE. The developed
models are significant. The study concluded that FDR has significant negative impact on
NOP, ROA and ROE. While Financial Policy of cement firms has significant positive
effect on ROA and ROE. IP and sales growth has insignificant positive impact on
profitability measures. While the firms' size has insignificant negative effect on cement
firms' profitability.
Practical Implications: The investors who are interested in investing cement firms of
Karachi would have benefit of the study and managers would be more likely to manage
Working Capital.
