The Impact of Working Capital Management (WCM) on Firm’s Profitability: The Case of Cement Industry of Khyber Pakhtunkhwa (Pakistan)

Abstract

In this study, researchers looked at how management working capital affected the profitability of manufacturing companies producing cement in Khyber Pakhtunkhwa, Pakistan. Our sample consisted of three manufacturing company’s registered on the Karachi Stock Exchange, and we examined their performance over a 12-year period from 2008 to 2020. Our primary independent variables were inventory turnover in days (ITID) and average collection period (ACP), while the dependent variables included return on equity (ROE) and net profit margin (NPM). To examine how management working capital and business performance are related, Studies employed panel data analysis techniques. Our findings suggest a positive influence of management working capital on firm profitability. Importantly, this association was found to be statistically importance at the 5 percent level, indicating that effective management of working capital contributes positively to shareholder value. Our study highlights the significant of sound management working capital practices in enhancing the performance of cement manufacturing companies in Khyber Pakhtunkhwa, Pakistan, ultimately benefiting their shareholders.