A Study on Working Capital Practices Across Manufacturing Sector of Pakistan

Journal of Managerial Sciences Volume XI Number 03 (2017)

20 Pages Posted: 24 Aug 2018

See all articles by Anwar Hussain

Anwar Hussain

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Ahmed Imran Hunjra

University of Waikato; Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Farida Faisal

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS) - Department of Management Sciences

Irfan Ahmad Baig

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Date Written: 2017

Abstract

The study examines the facts of working capital management practices adopted by Pakistani firms listed on Pakistan Stock Exchange (PSX). We collected data from 126 financial managers by using a questionnaire. We also make the discussion with financial analysts to know the components of working capital practices i.e. cash management, account receivable management, payable management, and inventory management. We found evidence that mostly firms follow hedge approach in financing and which involves a tradeoff between liquidity and profitability. Respondents consider account receivable management is backbone of efficient Working Capital. Moreover, we conclude that mostly firms rely on cash conversion cycle being a financial measure of WCM. Further, Pakistani firms tend to use centralized cash management and not follow any statistical tool or measure to control over inventory. Policy and decision makers and finance managers should pay more attention towards managing components of working capital and use statistical tool or software to check and evaluate their performance.

Keywords: Working Capital Practices; Cash Management; Receivable Management; Payable Management; Inventory Management; Survey Analysis

Suggested Citation

Hussain, Anwar and Hunjra, Ahmed Imran and Faisal, Farida and Baig, Irfan Ahmad, A Study on Working Capital Practices Across Manufacturing Sector of Pakistan (2017). Journal of Managerial Sciences Volume XI Number 03 (2017). Available at SSRN: https://ssrn.com/abstract=3229754

Anwar Hussain

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS) ( email )

Muree Road Rawalpindi
Rawalpindi, Punjab 44000
Pakistan

Ahmed Imran Hunjra (Contact Author)

University of Waikato ( email )

Te Raupapa
Private Bag 3105
Hamilton, 3240
New Zealand

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS) ( email )

Muree Road Rawalpindi
Shamsabad, Punjab 44000
Pakistan
00923457162527 (Phone)

Farida Faisal

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS) - Department of Management Sciences ( email )

Pakistan

Irfan Ahmad Baig

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS) ( email )

Muree Road Rawalpindi
Rawalpindi, Punjab 44000
Pakistan

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