working capital
1. Introduction
Working capital management is considered to be a very important element to analyze the organizations’ performance while conducting day to day operations, by which balance can be maintained between liquidity and profitability. Maintaining liquidity on daily base operation to make sure it’s running and meets its commitment is a crucial part required in managing working capital. It is a difficult task for mangers to make sure that the business function running in well-organized and advantageous manner. There are chances of inequality of current assets and current liability during this procedure Firm’s growth and profitability will be affected if this occurs and firm manger wouldn’t be able to manage it efficiently. According to Harris (2005) Working capital management is a simple and straightforward concept of ensuring the ability of the firm to fund the difference between the short term assets and short term liabilities. Nevertheless, complete mean and approach preferred to cover all its company’s activities related to vendors, customer and product. (Hall, 2002).
Now a day working capital management has considered as the main central issues in the firms and financial managers are trying to identify the basic drivers and level of working capital management (Lamberson, 1995).
The purpose of this study is to identify whether the performance of firms are affected by working capital management in Karachi Stock Exchange (KSE-30) Index companies. It has to establish the relationship between liquidity and firm’s performance considering Return on Assets (R.O.A) and Return on Equity (R.O.E). This study is very important for the manager non-financial institute of KSE-30 index firms because it will help them to set tradeoff between their liquidity and their performance of firms. They would come to know that at what extend they should increase their liquidity in order make their performance up to the mark. It will also help them to know
Working capital management is considered to be a very important element to analyze the organizations’ performance while conducting day to day operations, by which balance can be maintained between liquidity and profitability. Maintaining liquidity on daily base operation to make sure it’s running and meets its commitment is a crucial part required in managing working capital. It is a difficult task for mangers to make sure that the business function running in well-organized and advantageous manner. There are chances of inequality of current assets and current liability during this procedure Firm’s growth and profitability will be affected if this occurs and firm manger wouldn’t be able to manage it efficiently. According to Harris (2005) Working capital management is a simple and straightforward concept of ensuring the ability of the firm to fund the difference between the short term assets and short term liabilities. Nevertheless, complete mean and approach preferred to cover all its company’s activities related to vendors, customer and product. (Hall, 2002).
Now a day working capital management has considered as the main central issues in the firms and financial managers are trying to identify the basic drivers and level of working capital management (Lamberson, 1995).
The purpose of this study is to identify whether the performance of firms are affected by working capital management in Karachi Stock Exchange (KSE-30) Index companies. It has to establish the relationship between liquidity and firm’s performance considering Return on Assets (R.O.A) and Return on Equity (R.O.E). This study is very important for the manager non-financial institute of KSE-30 index firms because it will help them to set tradeoff between their liquidity and their performance of firms. They would come to know that at what extend they should increase their liquidity in order make their performance up to the mark. It will also help them to know