Abstract
The aim of the study is to investigate the impact of working capital management
(WCM) on firms profit in the context of non-financial firms listed on Pakistan Stock
Exchange PSX. To achieve the purpose, a sample of 73 non-financial firms listed on
Pakistan Stock Exchange (PSX) was examined over the period from 2011 to 2016.
Cash conversion cycle (CCC) is used to measure the working capital management,
while return on assets (ROA) and return on equity (ROE) are used to measure the
firms profit. Results reported significant negative relationship between cash
conversion cycle and firms profit but diverse results for working capital management
components. Such as only account conversion period and account payable period is
found significantly negative associated with the returns on asset. Overall results imply
significant increase in firms profit by reducing cash conversion cycle to a minimum
level. Moreover, results demonstrate negative association between liquidity and firm
profitability in line with the pecking order theory.
Dr. Muhammad Ibrahim Khan, Dr. Syed Mohsin Ali Shah, Dr. Sher Nawaz. (2018) Impact of Working Capital Management on Firms Profit: A case study of NonFinancial Firms listed on the Pakistan Stock Exchange, Sir Syed Journal of Education & Social Research (SJESR), Volume-01, Issue-1.
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