atif jahanger
IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN:2319-7668, PP 93-100 www.iosrjournals.org Impact of Working Capital Management on firms’ performance:
Evidence from Chemical sector listed firms in KSE-100 index
1
Adeel Mumtaz, 2Muhammad Rehan, 3Muhammad Rizwan, 4Farhan Murtaza,
5
Atif Jahanger, 6Hina Almas khan
1,2,4,5,6
3
MS Scholar, Department of Management Sciences, The Islamia University of Bahawalpur, Pakistan
Lecturer, Department of Management Sciences, The Islamia University of Bahawalpur, Pakistan
Abstract: The main objective of this paper is to determine the impact of working capital management on firm’s performance in progressing market such as Karachi stock exchange. In this paper we utilized different variables for the analysis of working capital management and firm performance in KSE for a sample of 22 firms of chemical sector for the period of 6 years from 2005-2010. The variables that were used in this study for the measurement of working capital management are number of days receivables, number of days inventory and the
Size, Leverage, Inventories, Equity, Sales, and GDP are the control variables. The dependent variable that is used in this study for the measurement of the firm performance is Return on Asset. The size of firm is positively affected by the firm profitability. The firms whose profits are higher, these firms are not interested in managing working capital and firm performance. The result from this study shows that there is negative relationship between the working capital and firm performance. The relationship between the size and profitability is positive. If the size of the firm is increased or decreased then the profitability increased or decreased respectively. Moreover, there are negative relationship between the profitability and the debt utilized by firms that support to pecking order theory.
Keywords: Working Capital Management, Equity, GDP, Chemical Sector, KSE-100
Evidence from Chemical sector listed firms in KSE-100 index
1
Adeel Mumtaz, 2Muhammad Rehan, 3Muhammad Rizwan, 4Farhan Murtaza,
5
Atif Jahanger, 6Hina Almas khan
1,2,4,5,6
3
MS Scholar, Department of Management Sciences, The Islamia University of Bahawalpur, Pakistan
Lecturer, Department of Management Sciences, The Islamia University of Bahawalpur, Pakistan
Abstract: The main objective of this paper is to determine the impact of working capital management on firm’s performance in progressing market such as Karachi stock exchange. In this paper we utilized different variables for the analysis of working capital management and firm performance in KSE for a sample of 22 firms of chemical sector for the period of 6 years from 2005-2010. The variables that were used in this study for the measurement of working capital management are number of days receivables, number of days inventory and the
Size, Leverage, Inventories, Equity, Sales, and GDP are the control variables. The dependent variable that is used in this study for the measurement of the firm performance is Return on Asset. The size of firm is positively affected by the firm profitability. The firms whose profits are higher, these firms are not interested in managing working capital and firm performance. The result from this study shows that there is negative relationship between the working capital and firm performance. The relationship between the size and profitability is positive. If the size of the firm is increased or decreased then the profitability increased or decreased respectively. Moreover, there are negative relationship between the profitability and the debt utilized by firms that support to pecking order theory.
Keywords: Working Capital Management, Equity, GDP, Chemical Sector, KSE-100
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