Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 25, 2017 erstellt
Description:
Working capital management deals with the balance of current assets and liabilities. Working capital management maximizes the level of firms to an optimal value. With time evidence has shown a significant impact of working capital on the performance of firms. Working capital management addresses the management of companies’ short-term capital and the objective of working capital management is to endorse satisfying profitability and minimize liabilities.Hence, the study examines the impact of working capital management on automotive manufacturing firms listed on the Pakistan Stock Exchange for the period 2007-2016. Profitability was measured by the performance of the firms by the rate of return on assets as the dependent variable. The cash conversion cycle, average payment period, inventory conversion period, and average collection period determined the working capital of the firms as independent working capital variables. Moreover, the control variable is firm size.The data was examined using EViews (version 10). The finding reveals that the average collection period, inventory conversion period, average payment period, and cash conversion cycle have an insignificant negative relationship with profitability. In the case of firm size, its relationship with profitability is positively significant. The value of R square reveals that our model is capturing 58% variation from independent and control variables. The value of F statistics indicates that our model is well fitted. In general collection payments from customers earlier and paying suppliers longer, keeping the product in stock less time, are all related to positive performance. Therefore, managers can increase a firm’s profitability by improving the performance of management of working capital components. The study in this case is done with delicate methods and proper sample models taken from verified sources