Working Capital Management And Corporate Performance Of Textile Sector In Pakistan

Abstract

Textile sector is considered as the backbone of Pakistani economy. The profitability and sustainability of the textile sector is very important for the economic growth of Pakistan. Working capital has a major role in the performance of any business entity. In this article the authors have tried to find out the impact of working capital management on the performance of textile sector companies. For the above said purpose, the data of 30 textile sector companies listed at Karachi Stock Exchange having maximum market share were analyzed. All the manufacturing firms generally face problems with their collection and payments schedule. The results have indicated that sales growth, receivables turnover, payables turnover, inventory turnover, gross working capital turnover, current assets turnover, and financial debt ratio have a significant impact on the profitability of the textile companies of Pakistan. The study also concludes that firms in Pakistan are following conservative working capital management policy due to shortage of funds; thus, the firms need to concentrate on the collection policies. There is a great need for the efficient policies for the management of working capital. Furthermore, the efficient management and least cost financing can increase the profitability of textile companies.