Impact of aggressiveness of working capital management on firm's profit

Abstract

Purpose of Study: The study intends to analyze the fact that whether it is better to be aggressive or conservative in formulating strategies for working capital management. The main objective of any firm is to earn the maximum profit but caring for the liquidity is also an important element. Profit of the firm can be increased, the problem comes when profit increases at the cost of liquidity. Methodology: The data we have collected is from Karachi stock exchange (61 companies) in Pakistan for the time tenure of 6 years (2013-2018). Results: This study explores the impact of aggressiveness of working capital management on the firm's profit. Implications/Applications: According to our analysis while considering the Current ratio and Cash conversion cycle as independent variables, there is a significant impact of Current ratio on the firm's profit.