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International Journal of Innovation and Applied Studies
ISSN: 2028-9324     CODEN: IJIABO     OCLC Number: 828807274     ZDB-ID: 2703985-7
 
 
Wednesday 11 December 2019

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Impact of Liquidity Management on Profitability of Pakistani Firms: A Case of KSE-100 Index


Volume 14, Issue 2, January 2016, Pages 304–314

 Impact of Liquidity Management on Profitability of Pakistani Firms: A Case of KSE-100 Index

Rizwan Ismail1

1 Department of Business and Management Sciences, Mirpur University of Science and Technology (MUST), P.O. Box: 10250, Mirpur AJK, Pakistan

Original language: English

Received 13 October 2015

Copyright © 2016 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract


The global financial crisis of 2007-08 has reverted the mounting importance of liquidity and profitability as a key concern in today's competitive business environment to generate funds internally. This study has examined the impact of the liquidity management on the performance of the 64 Pakistani non-financial companies constituting Karachi Stock Exchange (KSE) 100 Index for the period of 2006-2011. To derive the results of the study; descriptive statistical analysis, correlation analysis and multivariate regression tools of analysis were applied. According to the results of analyses, it is found that liquidity variables current ratio and the cash conversion cycle have significant positive impact on profitability (ROA). Further, results indicate that high current ratio and longer cash conversion cycle lead firms towards better performance. This study suggested firms to relax their credit sales policies, and devise inventory & collection turnover system in a wise manner to be more accessible to a large number of customers.

Author Keywords: Liquidity, Profitability, Karachi Stock Exchange (KSE) 100 Index.


How to Cite this Article


Rizwan Ismail, “Impact of Liquidity Management on Profitability of Pakistani Firms: A Case of KSE-100 Index,” International Journal of Innovation and Applied Studies, vol. 14, no. 2, pp. 304–314, January 2016.