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Corporate Profitability-Working Capital Management Tie: Empirical Evidence from Pharmaceutical Sector of Pakistan

Author

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  • Shafique Ahmed
  • Farhan Ahmed
  • Sahabia Kanwal

Abstract

The importance of working capital management in generating the corporate profitability cannot be disregarded. This study aims to empirically investigate the impact of working capital management on the profitability of pharmaceutical sector of Pakistan. The study has taken secondary data covering a period of six years from 2011 – 2016. Current ratio, cash conversion cycle and current assets to total assets were taken as independent variables to represent working capital management and return on the asset taken as the dependent variable to represent corporate profitability. Through panel regression analysis, this study has found a significant impact of current ratio and cash conversion cycle and current assets to total assets have an insignificant impact on corporate profitability. These results give an insight of managing corporate profitability by considering current ratio and cash conversion cycle. This study should be beneficial for the pharmaceutical sector of Pakistan as performance and survival of this sector is important for investor and for the health of the general public.

Suggested Citation

  • Shafique Ahmed & Farhan Ahmed & Sahabia Kanwal, 2018. "Corporate Profitability-Working Capital Management Tie: Empirical Evidence from Pharmaceutical Sector of Pakistan," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 8(7), pages 259-270.
    • Handle: RePEc:asi:ajoerj:v:8:y:2018:i:7:p:259-270:id:4222
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    Cited by:

    1. RukhsanaRasheed & Mehwish Shahid & Munaza Mukhtar & Mazhar Nadeem Ishaq, 2022. "Impact of Capital Structure and Liquidity Conditions on the Profitability of Pharmaceutical Sector of Pakistan," iRASD Journal of Management, International Research Alliance for Sustainable Development (iRASD), vol. 4(2), pages 135-142, june.
    2. Sidra Tahir & Saira Baloch, 2023. "Role of Working Capital Management in Enhancing Firm Profitability: An Empirical Study on the Manufacturing Companies of Pakistan," Journal of Economic Impact, Science Impact Publishers, vol. 5(3), pages 231-237.

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