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Factors Influencing the Profitability of Heavy Vehicle Industry: A Case of Pakistan

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  • Muhammad Aqil
  • Rizwan Raheem Ahmed
  • Jolita Vveinhardt
  • Dalia Streimikiene

Abstract

The purpose of this study is to explore the influence of working capital management on the profitability of the heavy vehicle industry in Pakistan from 2005 to 2017. For this purpose, five firms were selected. There were six independent variables that included average account payable, cash conversion cycle, accounts receivable turnover, inventory turnover, and quick ratio. The size of business was used as the control variable. The dependent variables were rerun on assets and return on equity. The Panel least squares regression (PLSR) was employed to examine the relationships amongst the variables. The results revealed that most of the elements of working capital have a significant effect on return on equity and return on assets. However, the size of the business had an insignificant impact on profitability. This research study has provided basic foils to the future research studies, and guidelines to the financial managers of heavy vehicle industry that how to manage their financial portfolios for optimum profitability.

Suggested Citation

  • Muhammad Aqil & Rizwan Raheem Ahmed & Jolita Vveinhardt & Dalia Streimikiene, 2019. "Factors Influencing the Profitability of Heavy Vehicle Industry: A Case of Pakistan," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 15(1), pages 61-72.
    • Handle: RePEc:mje:mjejnl:v:15:y:2019:i:1:p61-72
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    References listed on IDEAS

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    Cited by:

    1. Didik Susilo & Sugeng Wahyudi & Irene Rini Demi Pangestuti, 2020. "Profitability Determinants of Manufacturing Firms in Indonesia," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 53-64.
    2. Maryna Brychko & Yuriy Bilan & Serhiy Lyeonov & Dalia Streimikiene, 2023. "Do changes in the business environment and sustainable development really matter for enhancing enterprise development?," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(2), pages 587-599, April.
    3. Akhmadi Akhmadi & Dabela Yunia & Robiyanto Robiyanto, 2020. "The Role of Profitability in the Effect of Company Growth on the Debt Policy," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(4), pages 267-274, July.
    4. 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.
    5. Nastiti Pambayun Kinasih Yekti & Atahau Apriani Dorkas Rambu & Supramono Supramono, 2019. "Working Capital Management Policy: Female Top Managers and Firm Profitability," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 27(3), pages 107-127, September.

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