The trend in WC Management and its Impact on Firms Performance: A Case of PSX-100 Index

Abstract

The intention is to investigate the trends in WC management and the association of managing working capital with the firm’s performance. Return of total Assets is the proxy to measure the firm’s performance and its association with the variables representing the WCM is studied for a sample of 54 firms for the period 2004-2010.The variables like invdays and ardays show a considerable effect on the firm’s earning capability. The study proved a direct and considerable affiliation between the firm liquid position with its performance. Profitability and the firm’s size have a prominent positive association. The association between the debts ratio and the firm’s performance is inverse but this association is insignificant. Similarly, the results show insignificant relation between the profitability and the cash gap and account payable in days. The results show that there is an imperious role of better managing firm working capital with the firm’s performance.