REVISITING THE ENIGMA OF WORKING CAPITAL, PROFITABILITY AND RISK: EVIDENCE FROM PAKISTAN

Authors

  • Sumaira Ahmad Malik The University of Haripur
  • Asad Khan The University of Haripur
  • Zia ur Rehman The University of Haripur
  • Abdul Qadir Shah The University of Haripur

Abstract

This study investigates the relationship between working capital management and firm profitability. We incorporate moderating effect of systematic and unsystematic risk to ascertain the impact of risk on working capital decisions. The study uses secondary data of 244 listed non-financial firms over 10 years from 2009 to 2018. The findings reveal that inventory turnover, receivable collection period and cash conversion cycle negatively influence firm performance. However, accounts payable period has significant and positive effect on firm performance. Systematic risk negatively moderates the relationship between accounts payable period and return on assets and positively moderates relationship among accounts collection period, cash conversion cycle and return on assets. Unsystematic risk has insignificant effect on the relationship between working capital and profitability.

Author Biographies

Sumaira Ahmad Malik, The University of Haripur

Research Scholar,
Department of Management Sciences

Asad Khan, The University of Haripur

Lecturer,

Department of Management Sciences

The University of Haripur

Zia ur Rehman, The University of Haripur

Assistant Professor,
Department of Management Sciences

Abdul Qadir Shah, The University of Haripur

Lecturer,
Department of Management Sciences

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Published

01.07.2021