Impact of Working Capital Management on Firm Performance: A Comparative Analysis between Technology and Communication Sector Versus Power Generation and Distribution Sector Listed in Pakistan Stock Exchange

Abstract

The study empirically examines the specific measures of working capital management with organizational profitability. The study also compares the results of the technology and communication sector and power generation and distribution sector listed in the Pakistan stock exchange. The empirical data used in this research is secondary data taken from annual reports of companies listed in the Pakistan stock exchange for the period of 2013 to 2019. The study uses return on asset and return on equity as dependent variables, current ratio, cash conversion cycle, accounts payable turnover ratio, accounts receivable turnover ratio, and inventory turnover ratio as independent variables, leverage, and size as control variables. The findings reveal that the technology and communication sector performs better than the power generation and distribution sector. Managers should take critical decisions to run business operations smoothly and to handle their working capital in a more efficient way that will result in value creation of the organization.