The determinants of working capital management in Pakistan
The case of manufactoring sector
Keywords:
Working capital management,, manufacturing industry,, Pakistan,Abstract
This study aims at exploring the determinants of working capital management in manufacturing sector listed at Pakistan Stock Exchange (PSE). It has considered all the components of working capital management i.e, cash conversion cycle, average collection period, average payment period and inventory turnover in days. The analysis has been done by utilizing data of 127 Pakistan stock exchange listed firms from four largest industries in Pakistan i.e., textile, sugar, chemical and cement for the period between 2008 and 2013. Hausman results demonstrate that Liquidity, Leverage and Sales growth, Firm age, Operating cash flow are significant determinants of working capital management. In addition, the macroeconomic conditions like GDP and financial crisis also affect the components of working capital management.
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