Abstract:
This study is based on the impact of working capital management
on firm’s profitability. Usually, a company is always aims to
have the greater risk in order to gain maximum profit, so that’s
why firm reduces the investment of its working capital in
proportion to the firm’s sales. In opposite to if a firm’s wants
to increase its liquidity position then, it will increase the
investment in working capital to gain the maximum liquidity
position. Though, the policies to invest in working capital more
will Leads the firms to decreases its sales volume as a result
reduction in profitability as well. That's why; a firm has to
maintain a balance between liquidity and profitability.
In this research an endeavor has been made to check the impact
of working capital management policies towards the profitability
of Pakistan Pharmaceutical Industry for the period (2004 to
2008).The impact of working capital management on firm’s
profitability will examine by using statistical tools like one
to one correlation and regression model to check the association
and cause effect relationship between working capital and
profitability by using ratio of both variables as secondary
data.
