Impact of Working Capital Management on the Financial Performance: A Case Study of the Automotive Industry of Pakistan 1923-2926


Aim: The current research aims to examine the impact of working capital management on the financial performance in the automotive industry of Pakistan

Method: The data is gathered from secondary sources where the annual reports of the listed automotive companies of Pakistan are accessed. The total numbers of companies that are chosen to be analyzed in the research are 12. The data is collected over five years, beginning in 2016 and ending in 2020. ROA and ROE are the variables of financial performance whereas the cash conversion cycle (CCC) represents the working capital management.

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As per Le et al (2018), every organization requires enough liquid assets in the short to medium term to maintain the flow of cash needed for operational processes. Nevertheless, this would not mean that working capital is only important in the shorter term; an adequate liquidity resource is also beneficial to ensure the professional’s long-term viability. The firm’s overall capital is partitioned into fixed capital as well as working capital. The working capital panel has frequently been neglected, resulting in suboptimal usage of not only cash flow but also capital investment working capital management.

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Alavinasab, M., and Davoudi, E. 2013, Studying The Relationship Between Working Capital Management And Market value Of Listed Companies In Tehran Stock Exchange, Business Management Dynamics Vol.2, No.7, Pp.01-08.

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