An Investigation into Efficiency of Working Capital by Chemical Firms in Pakistan

  • Shahid Ali
  • Muhammad Mohsin Khan
  • Muhammad Nouman

Abstract

Financial policy making is deemed essential for achieving higher economic dividends. There is a need to study the neglected area of working capital management with special emphasis on its efficiency. This paper directs attention to study this topic for listed chemical sector of Pakistan. The current practice is examined in light of a nine year panel data from the State Bank of Pakistan. Reviewed literature identifies vacuums that attract attention and invite research openings. The criticism on contemporary method of using ratios towards managing working capital is noticeable. Three indices namely a utilization index, a performance index and an efficiency index are identified and computed for all firms and for industry as a whole to get a broader picture. Regression analysis is used to observe the level of change in these firms towards achieving more efficiency. The study concludes that the chemical sector of Pakistan is managing its working capital only satisfactorily and over the years the efficiency level is disproving. The firms are not taking a fuller advantage of their employed current assets towards value maximization
Published
2010-04-22
How to Cite
ALI , Shahid; KHAN , Muhammad Mohsin; NOUMAN , Muhammad. An Investigation into Efficiency of Working Capital by Chemical Firms in Pakistan . Business & Economic Review, [S.l.], v. 3, n. 2, p. 198-217, apr. 2010. ISSN 2519-1233. Available at: <https://bereview.pk/index.php/BER/article/view/52>. Date accessed: 21 june 2021.
Section
Articles

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