Impact of Working Capital Management on Financial Charges: Empirical Evidence of Manufacturing Industry of Pakistan

Research Journal of Finance and Accounting, Vol. 9, Issue 20, pp 110-119 (2014)

11 Pages Posted: 6 Feb 2017

See all articles by Mohsin Vohra

Mohsin Vohra

Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST) - Department of Management Sciences

Hasan Raza

University of Karachi - Department of Commerce

Muhammad Farrukh Aslam

Department of Commerce

Muhammad Mubeen

IQRA University

Date Written: August 20, 2014

Abstract

Conventionally, the researchers in finance realm have principally focused on the long-term financial decisions making, particularly capital structure, dividends, investments, and company valuation decisions. However, shorttermassets and liabilities are important components of total assets and needs to be carefully analyzed. Working capital management plays a significant role in better performance of firms worldwide. This paper analyzes the impact of Financial Charges onto working capital management in the firms of Pakistan for the period 2006 to 2011. For this purpose, panel data of 8 Pharmaceutical manufacturing firms is used which are listed on Karachi Stock Exchange. The results indicate that the average collection period, inventory holding period, average payable period, cash conversion cycle, net trade cycle are not single-handedly significantly affecting the working capital of the firms but after taking the lag collective effect of all working capital resulted in significant. The useful policies must be devised for the individual components of working capital but the results lead us that an aggregative effect is expected in working capital management from the perspective of financial charges impact. Furthermore, for handsome reduction in the financial charges efficient management of all working capital components are vital & future study of the same dimension shall bring more insight reviews & make it more reliable.

Keywords: Working Capital Management, Financial Charges, Manufacturing Industry

Suggested Citation

Vohra, Mohsin and Raza, Hasan and Aslam, Muhammad Farrukh and Mubeen, Muhammad, Impact of Working Capital Management on Financial Charges: Empirical Evidence of Manufacturing Industry of Pakistan (August 20, 2014). Research Journal of Finance and Accounting, Vol. 9, Issue 20, pp 110-119 (2014), Available at SSRN: https://ssrn.com/abstract=2910480

Mohsin Vohra

Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST) - Department of Management Sciences ( email )

Islamabad
Pakistan

Hasan Raza

University of Karachi - Department of Commerce ( email )

University of Karachi
University Road
Karachi, Sindh
Pakistan

Muhammad Farrukh Aslam

Department of Commerce ( email )

University of Karachi
University Road
Karachi, Sindh
Pakistan

Muhammad Mubeen (Contact Author)

IQRA University ( email )

Defence View
Shaheed-e-Millat Road (Ext.)
Karachi, Sindh 75500
Pakistan

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