Impact of Working Capital Management on the Profitability of the Cement Sector of Pakistan

Working Capital Management is the golden brick in the world of finance. It helps in making the management decisions of the firms. When the Working Capital is managed improperly that is when too large or too small amount of Working Capital is used, results in negative impact on the firms. Therefore a balance level of Working Capital is required to have greater profits. In our research we examined the impact of Working Capital Management on Profitability. We used a sample of two cement companies listed in Karachi Stock Exchange (KSE) for the time period of (2001-2011) and the number of observation are ten. The reason for doing a research is to develop a significant statistical relation between profitability, Cash Conversion Cycle (CCC) and the components (Number of Days Inventory, Number of Days Account Receivables and Number of Days Payables). Our research analysis concluded that there is significant inverse relation between Profitability calculated through Returns on Assets and CCC. Managers can make profits for the firms by maintaining CCC properly and controlling the number of days account receivables and number of days inventory