Cash Crops of Pakistan

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Final project

WORKING MANAGEMENT CAPITAL OF TEXTILE INDUSTRIES OF PAKISTAN

THE UNIVERSITY OF LAHORE

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Submitted by:

Muhammad Asim

Malik Adil Rehman

Imran

Rabia Riaz

Submitted to:-

Sir Kashif Mushtaq

In partial fulfillment of the requirement for the Degree of MBA

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Project Supervisor

Sir Kashif Mushtaq

_________________

Examiner-I

Mr. Abdul Gafoor __________________

Examiner-II

Mr. Junaid Khalid __________________

Abstract

Working capital management is important part in firm financial management decision. Improper management of Working capital, that is, too much or too low working capital may suffer firms, so an optimum level of working capital is the key to a smooth inflow of profit. In this paper we investigate the relationship between profitability and working capital management. We used a sample of 08 textile companies for the period of 2001-2005. The results of our research showed that there is great significance of working capital management with profitability, measured through using ratio analysis. Moreover managers can create profits for their companies by handling correctly Working capital, fixed assets’ cost, Cost of production, cost of debt (interest expense), and size (capital) of the firm .

Acknowledgment

All gratitude and thanks to almighty “ALLAH” the gracious, the most merciful and beneficent who gave me courage to undertake and complete this task.

I want to express my sincere gratitude for all the efforts taken during this research work by Mr. Kashif Mushtaq for his continuous support, encouraging, & motivation and valuable suggestions and guidance made this work possible Words are very few to express enormous humble obligations to my affectionate Parents for their prayers and strong determination to enabling me to achieve this job.

Table of contents

A. Chapter-I

1. Introduction to the project ………………………………………..7 2. Executive summary ………………………………………………8 i. Problem Statement ……………………………….8 ii. Research Objectives………………………………8 iii. Significance of Research …………………………9 3. Textile industry………………………………………………… 11 i. Investment in textile sector………………………13 ii. Reforms in textile sector…………………………13 4. Working Capital Management (Definition, formula & composition)16 B. Chapter-II

5. Literature Review……………………………………………….17 C. Chapter-III

6. Research Methodology and design……………………………..35 i. Method of study ………………………………….35 ii. Data ………………………………….35 iii. Sampling procedure ………………………………35 iv. Research Instruments …………………………….35 v. Financial tools………………………………….36 7. Variables …………………………………………………. 36 i. Dependent Variable………………………………36 ii. Independent Variables………………………….36 8. Ratios …………………………………………………………..37 9. Data Analysis and interpretation ………………………39 10. Conclusion……………………………………………………..41 11. Bibliography…………………………………………………...42

WORKING MANAGEMENT CAPITAL OF TEXTILE INDUSTRIES OF PAKISTAN

CHAPTER -I

Introduction to the Project

The main aim of this study is to investigate the relationship between working capital management (WCM) and firm’s profitability in the textile sector of Pakistan. WCM plays an important role in firm’s financial management decisions. An optimal WCM is expected to contribute positively to the creation of firm’s value and enhancement of its profitability. Working capital, fixed assets’ cost, Cost of production, cost of debt (interest expense), and size (capital) of the firm as control variables will also used to investigate their effect on profitability (net income). A sample size of 08 textile companies in Pakistan has been selected for a period of five...
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