Impact of Working Capital Management on Value Enhancing Across Manufacturing Sector of Pakistan

Research Journal of Finance and Accounting, Vol.8, No.11, 2017

7 Pages Posted: 24 Aug 2018

See all articles by Ahmed Imran Hunjra

Ahmed Imran Hunjra

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

Anwar Hussain

Pir Mehr Ali Shah Arid Agriculture University Rawalpindi (PMAS)

Haji Husnain Shah

University of Lahore (UOL)

Date Written: 2017

Abstract

Working Capital Management (WCM) shows a significant role in manufacturing firm’s performance. Current study examines the effect of WCM on firm’s performance, stock performance, investment and value enhancing for the time period of 7 years from 2010 to 2016 in Pakistan. Panel Data Technique along with descriptive and correlation test has been employed for the sake of analysis. Moreover, Fixed Effect Model is also applied with strong evidence from Hausman and likelihood test. Stock performance is calculated by using the market to book value, operating performance by return on assets. Excess return is calculated by subtracting the expected return (Capital Assets Pricing Model) from the actual return (Share Prices return). Data has been gathered from annual reports, balance sheet analysis, yahoo finance, open door and from Pakistan Stock Exchange. Eventually, strong evidence has been found that WCM has a significant impact on the firm, as well as on stock performance, investment and value enhancing of the manufacturing sector of Pakistan. Moreover, the result suggests that firms can enhance their value, increase stock and operating performance and maximize the investment value with the optimal level of WCM. So, present research concludes in the light of investigated results that WCM plays a vital role for organization performance.

Keywords: Working Capital Management, Value Enhancing, CAPM, Stock Performance, Investment, Excess Return, Pakistan

Suggested Citation

Hunjra, Ahmed Imran and Hussain, Anwar and Shah, Haji Husnain, Impact of Working Capital Management on Value Enhancing Across Manufacturing Sector of Pakistan (2017). Research Journal of Finance and Accounting, Vol.8, No.11, 2017. Available at SSRN: https://ssrn.com/abstract=3229758

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)

Anwar Hussain

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

Muree Road Rawalpindi
Rawalpindi, Punjab 44000
Pakistan

Haji Husnain Shah

University of Lahore (UOL)

1 - KM Defence Road Campus
54000
Lahore, Punjabn 54000
Pakistan

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