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Profitability Case Study

1066 Words5 Pages

Working capital management & profitability
(A case study of PSO Company)

Acfand Yar
BUITEMS Quetta

Abstract:
The aim of the research is to empirically show the effect of working capital on the profitability and the liquidity of the PSO Company which is also listed in the Karachi stock Exchange. We have concentrated on the impact of distinctive variables of working capital administration including the Average collection period, Inventory turnover in days, Average payment period, Cash conversion cycle and Current ratios on the Net operating profitability of PSO Company and check that which variable is playing important role in profitability. The consequences of the examination demonstrate that there is a significant effect of the working capital …show more content…

It manages current assets and current liabilities. Working capital administration is vital because of numerous reasons. First and foremost, the present resources of a normal assembling firm represents over portion of its aggregate resources. However firms with excessively couple of current assets may bring about deficiencies and challenges in keeping up smooth operations (Horne and Wachowicz, 2000).Proficient working capital administration includes arranging and controlling current resources and current liabilities in a way that takes out the danger of powerlessness to meet due transient commitments from one perspective and maintain a strategic distance from over the top interest in these benefits then again (Eljelly, …show more content…

The issue emerged in light of the fact that the boost of the association's profits could truly undermine its liquidity, and the quest for liquidity tended to weaken returns. This article assessed the relationship in the middle of customary and option working capital measures and degree of profitability (ROI), particularly in mechanical firms recorded on the Johannesburg Stock Exchange (JSE). The issue under scrutiny was to set up whether the all the more as of late created option working capital ideas demonstrated enhanced relationship with rate of return to that of conventional working capital proportions or not. Results showed that there were no noteworthy contrasts amongst the years regarding the autonomous variables. The consequences of their stepwise relapse supported that aggregate current liabilities partitioned by assets stream represented the majority of the variability in Return on Investment

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