Relationship between Working Capital and Corporate Performance in the Textile Sector of Pakistan

Abstract

This research study has tried to examine the association between the working capital and corporate performance in the textile sector of Pakistan. Textile sector is one of the major sectors in Pakistan which have crucial contribution in the economy. Secondary data was gathered and used for the evaluation of the relationship between the working capital and corporate performance in the textile sector of Pakistan. Data was collected from the annual reports of the companies published during 2008-2012. Regression Model is used for the analysis of the gathered data. Results revealed that average collection period and operating cycle are positively associated with the corporate performance of the organizations in Pakistan. Corporate performance is measured through return on equity and firm size is positively associated with the return on equity. Leverage is negatively linked to the return on equity in the textile sector of Pakistan. Overall it has been observed that working capital and corporate performance are linked and have significant impact on the textile sector of Pakistan.