THE RELATIONSHIP BETWEEN WORKING CAPITAL MANAGEMENT AND CORPORATE PERFORMANCE IN THE CHEMICAL SECTOR OF PAKISTAN

Abstract

This study indicates the relationship between working capital management and corporate performance in the chemical sector of Pakistan. For analysis purpose, the chemical sector has been selected with the data from 2013-2015 of five companies from this sector that are listed on Karachi Stock Exchange. For the investigation purpose, this study analyzes the effect of variables receivables turnover period (RTP), payables payment period (PPP), inventory turnover period (ITP), and cash conversion cycle (CCC) as a measure of working capital management (WCM) on return on equity (ROE) as a measure of corporate performance. Pooled panel data analysis, regression and correlation tests are used. This study proves that there is a significant effect of working capital management (WCM) on corporate performance in the chemical sector of Pakistan.