A COMPARATIVE ANALSIS OF THE EFFECT OF WORKING CAPITAL ...… · aspects of short-term finance, particularly the working capital management, is even scarce in a country like ours

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A COMPARATIVE ANALSIS OF THE EFFECT OF WORKING CAPITAL MANAGEMENT ON THE PROFITABILITY OF SMALL AND LARGE COMPANIES LISTED

AT KARACHI STOCK EXCHANGE

By Mustafa Afeef

PhD (Management Sciences)

February, 2011

QURTUBA UNIVERSITY OF SCIENCE AND INFORMATION TECHNOLOGY, PESHAWAR

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A COMPARATIVE ANALSIS OF THE EFFECT OF WORKING CAPITAL MANAGEMENT ON THE PROFITABILITY OF SMALL AND LARGE COMPANIES LISTED

AT KARACHI STOCK EXCHANGE

A Doctoral Dissertation submitted to Qurtuba University of Science and Information Technology in partial fulfillment of the requirements for

the degree of Doctor of Philosophy in Management Sciences

February, 2011

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APPROVAL SHEET

QURTUBA UNIVERSITY OF SCIENCE AND INFORMATION TECHNOLOGY, PESHAWAR

A COMPARATIVE ANALSIS OF THE EFFECT OF WORKING CAPITAL MANAGEMENT ON THE PROFITABILITY OF

SMALL AND LARGE COMPANIES LISTED AT KARACHI STOCK EXCHANGE

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PREFACE

Short-term management of financial affairs seems to have been intermittently overlooked

by researchers in the field of Financial Management. Scholarly work on the various

aspects of short-term finance, particularly the working capital management, is even

scarce in a country like ours where research endeavors in the educational institutions are

not usually accentuated much. Although quite a great deal of work has been done on the

impact of working capital management on a firm’s profitability in India, the subject

remains barely thrashed out in the other nations of the subcontinent.

This thesis pertains to the effect of the efficient management of working capital on the

profitability of firms listed in Karachi Stock Exchange. However, unlike previous studies,

this effort has a distinct objective. The work is aimed to compare the effects of WCM on

profitability of Small firms with that of its influence on the profit performance of large

organizations. In other words, the work is intended to reveal whether the size of a firm

has anything to do with the potential impact of its WCM on its output. Or, is the effective

management of working capital more of a constructive exertion for large firms or is it the

vice versa…?

To serve the purpose, firms of both large and small size listed in KSE were sampled

independently and the effect of WCM on profitability was determined for each of the

samples using the SPSS 16 software. Results drawn from both samples were then

compared coherently to achieve the very objective of the study. Nonetheless, it is

expected that this humble effort will work out to be a pathway for those who may come

forward to further enrich the study.

January, 2011 Mustafa Afeef

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ACKNOWLEDGEMENTS

The impetus to delve into short-term finance came from the veracity that so little had

been explored so far in the subject particularly in this region. However, the urge and the

initiative to do all this may be attributed to the blessings of the Almighty, no doubt.

I am highly obliged and indebted to my Supervisor, Prof. Dr. Khair-uz-Zaman, whose

unfailing guidance helped me and encouraged me a lot during the course of my research

work. He was always there to provide me with his valuable suggestions. I found him very

nice and cooperative indeed.

While carrying out this research study, I have freely quoted many of the available text,

reference books and research papers etc., thus having got ample assistance from the

previously done work, to the authors of which I must express my sincere indebtedness.

I also owe a deep debt of gratitude to Prof. Dr. Muhammad Saleem of Qurtuba University

Peshawar not only for his constructive criticism but for the special moral uplift and

support that he offered me at all stages of the preparation of this manuscript.

I must place on record my deepest gratitude to Mr. Nazim Ali, a PhD Scholar at Qurtuba

University Peshawar for his help in enabling me to get access to the required financial

data vital for the conduction of this research.

Finally, the encouragement and especially the immense financial support granted by the

Higher Education Commission must also be gratefully acknowledged. A special

acknowledgement, in this regards, is due to the then Chairman of the Commission, Dr.

Atta-ur-Rehman, for his very strenuous and remarkable efforts to initiate and inaugurate a

truly research-oriented culture in the educational institutions by launching fully funded

Fellowship programs for students of higher studies throughout the country.

January, 2011 Mustafa Afeef

PhD (Management Sciences)

Session 2006-2011

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Dedication:

To my very beloved father, who so much wished to see his son earn a

PhD degree in Management Sciences, but …

passed away long before that could ever be realized!

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LIST OF ACRONYMS

CCC Cash Conversion Cycle

CR Current Ratio

EBIT Earnings Before Interest and Taxes

GDP Gross Domestic Product

ICP Inventory Conversion Period

KSE Karachi Stock Exchange

Log Logarithm

Obs. Observations

OI Operating Income

OPS Operating Profit to Sales

PDP Payable Deferral Period

RCP Receivable Collection Period

ROA Return On Assets

SBP State Bank of Pakistan

SME Small and Medium Enterprises

SPSS Statistical Package for Social Sciences

St. Dev. Standard Deviation

WCM Working Capital Management

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CONTENTS IN BRIEF Preface ……………………………………………………………………………………………….i

Acknowledgements ……………………………………………………………………….ii

Dedication ………………………………………………………………………………………..iii

List of Acronyms ………………………………………………………………………….....iv

List of Tables ……………….……………………………………………………………………xi

Abstract ……………………………………………………………………………………………xxi

CHAPTER 1: INTRODUCTION………………………...1 - 14

CHAPTER 2: REVIEW OF LITERATURE……………….….…..15 - 37

CHAPTER 3: THE RESEARCH METHODOLOGY……………….…..….38 - 52

CHAPTER 4: COLLECTION OF DATA………………….....53 - 125

CHAPTER 5: ANALYSES AND FINDINGS…………………….126 - 311

CHAPTER 6: CONCLUSION……………………..312 - 317

Bibliography…………………………………………………………………………………...318

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CONTENTS

CAPTION PAGE(S)

Preface i Acknowledgements ii Dedication iii List of Acronyms iv Contents in Brief v Contents vi List of Tables xi Abstract xxi

CHAPTER 1: INTRODUCTION 1 – 14

1.1 BACKGROUND OF THE RESEARCH 1 1.2 STATEMENT OF THE RESEARCH QUESTION 2 1.3 THE HYPOTHESES 3

1.3.1 Hypothesis 1 3 1.3.2 Hypothesis 2 3 1.3.3 Hypothesis 3 3 1.3.4 Hypothesis 4 4 1.3.5 Hypothesis 5 4 1.3.6 Hypothesis 6 4

1.4 OBJECTIVES OF THE STUDY 5 1.5 JUSTIFICATION AND LIKELY BENEFITS 5 1.6 LIMITATIONS OF THE STUDY 6 1.7 CONJECTURAL FRAMEWORK 6 1.8 ORGANIZATION OF THE DISSERTATION 10 1.9 KEY TERMS AND DEFINITIONS 10

1.9.1 Working Capital Management 10 1.9.2 Cash Conversion Cycle 11 1.9.3 Inventory Conversion Period 11 1.9.4 Receivable Collection Period 11 1.9.5 Payable Deferral Period 12 1.9.6 Liquidity 12 1.9.7 Profitability 12

END NOTES 13

CHAPTER 2: REVIEW OF LITERATURE 15 – 37

2.1 MARC DELOOF 15 2.1.1 Findings of his Study 16

2.2 SUSHMA VISHNANI AND BHUPESH KR. SHAH 17 2.2.1 Findings of their Study 18

2.3 PEDRO JUAN GARCÍA-TERUEL AND PEDRO MARTÍNEZ-SOLANO 19

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2.3.1 Findings of their Study 20 2.4 DR IOANNIS LAZARIDIS AND MSC DIMITRIOS TRYFONIDIS 21

2.4.1 Findings of their Study 22 2.5 AZHAGAIAH RAMACHANDRAN AND M. JANAKIRAMAN 23

2.5.1 Findings of their Study 23 2.6 M. A., ZARIYAWATI, M. N., ANNUAR AND A.S., ABDUL RAHIM 24

2.6.1 Findings of their Study 25 2.7 ABDUL REHMAN AND MOHAMED NASR 25

2.7.1 Findings of their Study 26 2.8 HAITHAM NOBANEE AND MARYAM ALHAJJAR 27

2.8.1 Findings of their Study 27 2.9 DR. S. BENJAMIN CHRISTOPHER AND MS. A. L. KAMALAVALLI 28

2.9.1 Findings of their Study 29 2.10 HAITHAM NOBANEE 29

2.10.1 Findings of his Study 30 2.11 HAITHAM NOBANEE AND MARYAM ALHAJJAR 2 31

2.11.1 Findings of their Study 31 2.12 OTHER RELATED PAPERS 32 END NOTES 35

CHAPTER 3: THE RESEARCH METHODOLOGY 38 – 53

3.1 COLLECTION OF THE DATA 38 3.2 THE SAMPLES 39

3.2.1 Sample 1 --- For SMEs Listed in KSE 39 3.2.2 Sample 2 --- For Large Companies Listed in KSE 40

3.3 VARIABLES USED IN THE STUDY 42 3.3.1 Comparison of Variables used for Measuring the Efficiency of WCM 43

3.3.1.1 The Net Trade Cycle 43 3.3.1.2 The Weighted Cash Conversion Cycle 43 3.3.1.3 The Optimal Cash Conversion Cycle 44 3.3.1.4 The Cash Conversion Cycle 45

3.3.1.4.1 Measuring the Cash Conversion Cycle 46 3.3.1.4.2 Measuring the Components of Cash Conversion Cycle 46

3.3.1.4.2.1 Receivable Collection Period 46 3.3.1.4.2.2 Inventory Conversion Period 46 3.3.1.4.2.3 Payable Deferral Period 46

3.3.2 Comparison of Variables used for Measuring Liquidity 47 3.3.2.1 The Cash Ratio 47 3.3.2.2 The Quick Ratio 47 3.3.2.3 The Current Ratio 47

3.3.3 Comparison of Variables used for Measuring Profitability 48 3.3.3.1 The Return on Assets 48 3.3.3.2 The Gross Operating Profit 49 3.3.3.3 The Operating Profit to Sales 49

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3.3.4 Control Variables used and their Measurement 49 3.3.4.1 The Natural Logarithm of Sales 50 3.3.4.2 The Sales Growth 50 3.3.4.3 The Financial Leverage 50

3.4 STATISTICAL TOOLS USED IN THE STUDY 50 3.5 THE REGRESSION MODEL 51 3.6 THE STRUCTURE OF DATA ANALYSES 52

3.6.1 The Descriptive Analysis 52 3.6.2 The Quantitative Analysis 52

END NOTES 53

CHAPTER 4: COLLECTION OF DATA 54 – 126

4.1 REPRESENTATION OF THE COLLECTED DATA OF SMALL COMPANIES LISTED IN KSE (SAMPLE 1)

55

4.2 REPRESENTATION OF THE COLLECTED DATA OF LARGE COMPANIES LISTED IN KSE (SAMPLE 2)

75

CHAPTER 5: ANALYSES AND FINDINGS 127 – 312

5.1 THE DESCRIPTIVE AND QUANTITATIVE ANALYSES FOR FIRMS IN SAMPLE 1

128


168

5.3 RESULTS OF THE CORRELATION ANALYSES OF INDIVIDUAL FIRMS IN SAMPLE 1

271

5.3.1 Correlation of ROA with the Indicators of WCM and Liquidity 272 5.3.1.1 ROA and the Inventory Conversion Period 272 5.3.1.2 ROA and the Receivable Collection Period 273 5.3.1.3 ROA and the Payable Deferral Period 273 5.3.1.4 ROA and the Cash Conversion Cycle 273 5.3.1.5 ROA and the Current Ratio 273

5.3.2 Correlation of OPS with the Indicators of WCM and Liquidity 274 5.3.2.1 OPS and the Inventory Conversion Period 274 5.3.2.2 OPS and the Receivable Collection Period 274 5.3.2.3 OPS and the Payable Deferral Period 274 5.3.2.4 OPS and the Cash Conversion Cycle 275 5.3.2.5 OPS and the Current Ratio 275

Results of Overall Individual SME Correlation Analysis 275 5.4 RESULTS OF THE CORRELATION ANALYSES OF INDIVIDUAL FIRMS IN SAMPLE 2

276

5.4.1 Correlation of ROA with the Indicators of WCM and Liquidity 276 5.4.1.1 ROA and the Inventory Conversion Period 276 5.4.1.2 ROA and the Receivable Collection Period 276 5.4.1.3 ROA and the Payable Deferral Period 277 5.4.1.4 ROA and the Cash Conversion Cycle 277 5.4.1.5 ROA and the Current Ratio 277

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5.4.2 Correlation of OPS with the Indicators of WCM and Liquidity 278 5.4.2.1 OPS and the Inventory Conversion Period 278 5.4.2.2 OPS and the Receivable Collection Period 278 5.4.2.3 OPS and the Payable Deferral Period 278 5.4.2.4 OPS and the Cash Conversion Cycle 279 5.4.2.5 OPS and the Current Ratio 279

Results of Overall Individual Large Company Correlation Analysis 279 5.5 COMPARISON OF RESULTS OF THE CORRELATION ANALYSES FOR SAMPLE 1 AND SAMPLE 2

280

5.5.1 Comparison of ROA-ICP Correlations for Small and Large Companies 280 5.5.2 Comparison of OPS-ICP Correlations for Small and Large Companies 281 5.5.3 Comparison of ROA-RCP Correlations for Small and Large Companies 281 5.5.4 Comparison of OPS-RCP Correlations for Small and Large Companies 282 5.5.5 Comparison of ROA-PDP Correlations for Small and Large Companies 282 5.5.6 Comparison of OPS-PDP Correlations for Small and Large Companies 283 5.5.7 Comparison of ROA-CCC Correlations for Small and Large Companies 283 5.5.8 Comparison of OPS-CCC Correlations for Small and Large Companies 284 5.5.9 Comparison of ROA-CR Correlations for Small and Large Companies 284 5.5.10 Comparison of OPS-CR Correlations for Small and Large Companies 285

Summary of Results of the Comparative Analysis 285 5.6 THE DESCRIPTIVE ANALYSES FOR SAMPLES 287

5.6.1 Descriptive Analysis for Sample 1 287 5.6.2 Descriptive Analysis for Sample 2 289

5.7 THE QUANTITATIVE ANALYSES FOR SAMPLES 291 5.7.1 The Correlation Analysis for Sample 1 291

5.7.1.1 Results of the Correlation Analysis between the Profitability Indicators and the Inventory Conversion Period

291

5.7.1.2 Results of the Correlation Analysis between the Profitability Indicators and the Receivable Collection Period

291

5.7.1.3 Results of the Correlation Analysis between the Profitability Indicators and the Payable Deferral Period

292

5.7.1.4 Results of the Correlation Analysis between the Profitability Indicators and the Cash Conversion Cycle

292

5.7.1.5 Results of the Correlation Analysis between the Profitability Indicators and the Current Ratio

292

5.7.1.6 Results of the Correlation Analysis between the Profitability Indicators and the Financial Leverage

293

5.7.1.7 Results of the Correlation Analysis between the Profitability Indicators and the Firm Size

293

5.7.1.8 Results of the Correlation Analysis between the Profitability Indicators and the Sales Growth

293

5.7.2 The Correlation Analysis for Sample 2 295 5.7.2.1 Results of the Correlation Analysis between the Profitability Indicators and the Inventory Conversion Period

295

5.7.2.2 Results of the Correlation Analysis between the Profitability Indicators and the Receivable Collection Period

295

5.7.2.3 Results of the Correlation Analysis between the Profitability Indicators 295

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and the Payable Deferral Period 5.7.2.4 Results of the Correlation Analysis between the Profitability Indicators and the Cash Conversion Cycle

296

5.7.2.5 Results of the Correlation Analysis between the Profitability Indicators and the Current Ratio

296

5.7.2.6 Results of the Correlation Analysis between the Profitability Indicators and the Financial Leverage

296

5.7.2.7 Results of the Correlation Analysis between the Profitability Indicators and the Firm Size

296

5.7.2.8 Results of the Correlation Analysis between the Profitability Indicators and the Sales Growth

297

5.7.3 Comparison of the Correlation Analysis for Sample 1 and that for Sample 2

299

5.7.4 The Regression Analysis ‘A’ for Sample 1 301 5.7.4.1 Results of Regression 1 302 5.7.4.2 Results of Regression 2 302 5.7.4.3 Results of Regression 3 302 5.7.4.4 Results of Regression 4 302 5.7.4.5 Results of Regression 5 303

5.7.5 The Regression Analysis ‘A’ for Sample 2 303 5.7.5.1 Results of Regression 6 303 5.7.5.2 Results of Regression 7 304 5.7.5.3 Results of Regression 8 305 5.7.5.4 Results of Regression 9 305 5.7.5.5 Results of Regression 10 305

5.7.6 Comparison of the Regression Analysis ‘A’ for Sample 1 and that for Sample 2

306

5.7.7 The Regression Analysis ‘B’ for Sample 1 307 5.7.7.1 Results of Regression 11 308 5.7.7.2 Results of Regression 12 308 5.7.7.3 Results of Regression 13 308 5.7.7.4 Results of Regression 14 308 5.7.7.5 Results of Regression 15 309

5.7.8 The Regression Analysis ‘B’ for Sample 2 309 5.7.8.1 Results of Regression 16 309 5.7.8.2 Results of Regression 17 310 5.7.8.3 Results of Regression 18 311 5.7.8.4 Results of Regression 19 311 5.7.8.5 Results of Regression 20 311

5.7.9 Comparison of the Regression Analysis ‘B’ for Sample 1 and that for Sample 2

312

CHAPTER 6: CONCLUSION 313 - 317

Bibliography 318

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LIST OF TABLES

Serial Table Title of the Table Page

1 3.1 Population and Samples 39 2 4.1 Aruj Garment Accessories Ltd. 55 3 4.2 International Knitwear Ltd. 55 4 4.3 Mubarak Textile Mills Ltd. 56 5 4.4 Mukhtar Textile Mills Ltd. 56 6 4.5 Regent Textile Industries Ltd. 57 7 4.6 Safa Textiles Ltd. 57 8 4.7 Amin Spinning Mills Ltd. 58 9 4.8 Mehr Dastagir Textile Mills Ltd. 58 10 4.9 Bannu Woolen Mills Ltd. 59 11 4.10 Kashmir Polytex Ltd. 59 12 4.11 Moonlite (Pak) Ltd. 60 13 4.12 Bawany Air Products Ltd. 60 14 4.13 Data Agro Ltd. 61 15 4.14 Leiner Pak Gelatine Ltd. 61 16 4.15 Sardar Chemical Industries Ltd. 62 17 4.16 Bela Automotives Ltd. 62 18 4.17 Johnson & Philips (Pakistan) Ltd. 63 19 4.18 The Climax Engineering Company Ltd. 63 20 4.19 Transmission Engineering Industries Ltd. 64 21 4.20 Dadabhoy Sack Ltd. 64 22 4.21 Pakistan Paper Products Ltd. 65 23 4.22 Ideal Energy Ltd. 65 24 4.23 S.G. Power Ltd. 66 25 4.24 Khyber Tobacco Company Ltd. 66 26 4.25 Sarhad Cigarette Industries Ltd. 67 27 4.26 Amin Fabrics Ltd. 67 28 4.27 Suhail Jute Mills Ltd. 68 29 4.28 Kakakhel Pakistan Ltd. 68 30 4.29 Al-Khair Gadoon Ltd. 69 31 4.30 Diamond Industries Ltd. 69 32 4.31 Goodluck Industries Ltd. 70 33 4.32 Grays Of Cambridge (Pakistan) Ltd. 70 34 4.33 Haji Dossa Ltd. 71 35 4.34 Hashimi Can Company Ltd. 71 36 4.35 Indus Fruit Products Ltd. 72 37 4.36 Leather Up Ltd. 72 38 4.37 Mandviwala Mauser Plastic Industries Ltd. 73 39 4.38 Pakistan House International Ltd. 73 40 4.39 Quice Food Industries Ltd. 74

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41 4.40 Syed Match Company Ltd. 74 42 4.41 Azgard Nine Ltd. 75 43 4.42 Colony Textile Mills Ltd. 75 44 4.43 Dewan Textile Mills Ltd. 76 45 4.44 Faisal Spinning Mills Ltd. 76 46 4.45 Fateh Textile Mills Ltd. 77 47 4.46 Fatima Enterprises Ltd. 77 48 4.47 Fazal Cloth Mills Ltd. 78 49 4.48 Gadoon Textile Mills Ltd. 78 50 4.49 Gul Ahmed Textile Mills Ltd. 79 51 4.50 Gulistan Textile Mills Ltd. 79 52 4.51 Indus Dyeing & Manufacturing Co. Ltd. 80 53 4.52 Kohinoor Textile Mills Ltd. 80 54 4.53 Mahmood Textile Mills Ltd. 81 55 4.54 Masood Textile Mills Ltd. 81 56 4.55 Nishat (Chunian) Ltd. 82 57 4.56 Nishat Mills Ltd. 82 58 4.57 Quetta Textile Mills Ltd. 83 59 4.58 Reliance Weaving Mills Ltd. 83 60 4.59 Saif Textile Mills Ltd. 84 61 4.60 Sapphire Fibres Ltd. 84 62 4.61 Sapphire Textile Mills Ltd. 85 63 4.62 Suraj Cotton Mills Ltd. 85 64 4.63 The Crescent Textile Mills Ltd. 86 65 4.64 Al-Abid Silk Mills Ltd. 86 66 4.65 Dewan Salman Fibre Ltd. 87 67 4.66 Gatron (Industries) Ltd. 87 68 4.67 Ibrahim Fibres Ltd. 88 69 4.68 Liberty Mills Ltd. 88 70 4.69 Rupali Polyester Ltd. 89 71 4.70 Abbott Laboratories (Pakistan) Ltd. 89 72 4.71 Berger Paints Pakistan Ltd. 90 73 4.72 Clariant Pakistan Ltd. 90 74 4.73 Colgate-Palmolive (Pakistan) Ltd. 91 75 4.74 Dawood Hercules Chemicals Ltd. 91 76 4.75 Engro Chemical Pakistan Ltd. 92 77 4.76 Fauji Fertilizer Bin Qasim Ltd 92 78 4.77 Fauji Fertilizer Company Ltd. 93 79 4.78 Glaxosmithkline (Pakistan) Ltd. 93 80 4.79 ICI Pakistan Ltd. 94 81 4.80 Pakistan PTA Ltd. 94 82 4.81 Sanofi Aventis (Aventis Pharma) 95 83 4.82 Searle Pakistan Ltd. 95 84 4.83 Sitara Chemical Industries Ltd. 96 85 4.84 Al-Ghazi Tractors Ltd. 96

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86 4.85 Atlas Honda Ltd. 97 87 4.86 Crescent Steel & Allied Products Ltd. 97 88 4.87 Dewan Farooque Motors Ltd. 98 89 4.88 General Tyre & Rubber Co. Ltd. 98 90 4.89 Ghandhara Nissan Ltd. 99 91 4.90 Hinopak Motors Ltd. 99 92 4.91 Honda Atlas Cars (Pakistan) Ltd. 100 93 4.92 Indus Motor Company Ltd. 100 94 4.93 International Industries Ltd. 101 95 4.94 Millat Tractors Ltd. 101 96 4.95 Pak Elektron Ltd. 102 97 4.96 Pak Suzuki Motor Company Ltd. 102 98 4.97 Pakistan Cables Ltd. 103 99 4.98 Siemens (Pakistan) Engineering Co. Ltd. 103

100 4.99 Dewan Sugar Mills Ltd. 104 101 4.100 Habib Sugar Mills Ltd. 104 102 4.101 JDW Sugar Mills Ltd. 105 103 4.102 Shakarganj Mills Ltd. 105 104 4.103 Century Paper & Board Mills Ltd. 106 105 4.104 Packages Ltd. 106 106 4.105 Bestway Cement Ltd. 107 107 4.106 Cherat Cement Company Ltd. 107 108 4.107 D.G. Khan Cement Company Ltd. 108 109 4.108 Dewan Cement Ltd. (Pakland Cement Ltd.) 108 110 4.109 Fauji Cement Company Ltd. 109 111 4.110 Fecto Cement Ltd. 109 112 4.111 Lucky Cement Ltd. 110 113 4.112 Maple Leaf Cement Factory Ltd. 110 114 4.113 Pioneer Cement Ltd. 111 115 4.114 Attock Refinery Ltd. 111 116 4.115 Japan Power Generation Ltd. 112 117 4.116 Karachi Electric Supply Corporation Ltd. 112 118 4.117 Kohinoor Energy Ltd. 113 119 4.118 Mari Gas Company Ltd. 113 120 4.119 National Refinery Ltd. 114 121 4.120 Pakistan Oilfields Ltd. 114 122 4.121 Pakistan Refinery Ltd. 115 123 4.122 Pakistan State Oil Company Ltd. 115 124 4.123 Shell Pakistan Ltd. 116 125 4.124 Southern Electric Power Co. Ltd. 116 126 4.125 Sui Northern Gas Pipelines Ltd. 117 127 4.126 Sui Southern Gas Company Ltd. 117 128 4.127 The Hub Power Company Ltd. 118 129 4.128 Pakistan International Airlines Corporation Ltd. 118 130 4.129 Pakistan National Shipping Corporation. 119

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131 4.130 Pakistan Telecommunication Company Ltd. 119 132 4.131 Lakson Tobacco Company Ltd. 120 133 4.132 Pakistan Tobacco Company Ltd. 120 134 4.133 Thal Jute Mills Ltd. 121 135 4.134 Bata Pakistan Ltd. 121 136 4.135 Ghani Glass Ltd. 122 137 4.136 National Foods Ltd. 122 138 4.137 Nestlé Pakistan Ltd. 123 139 4.138 Pakistan Services Ltd. 123 140 4.139 Rafhan Maize Products Co. Ltd. 124 141 4.140 Service Industries Ltd. 124 142 4.141 Tri-Pack Films Ltd. 125 143 4.142 Unilever Pakistan Foods Ltd. 125 144 4.143 Unilever Pakistan Ltd. 126 145 5.1 Descriptive Analysis for Aruj Garment Accessories Ltd. 128 146 5.2 Quantitative Analysis for Aruj Garment Accessories Ltd. 128 147 5.3 Descriptive Analysis for International Knitwear Ltd. 129 148 5.4 Quantitative Analysis for International Knitwear Ltd. 129 149 5.5 Descriptive Analysis for Mubarak Textile Mills Ltd. 130 150 5.6 Quantitative Analysis for Mubarak Textile Mills Ltd. 130 151 5.7 Descriptive Analysis for Mukhtar Textile Mills Ltd. 131 152 5.8 Quantitative Analysis for Mukhtar Textile Mills Ltd. 131 153 5.9 Descriptive Analysis for Regent Textile Industries Ltd. 132 154 5.10 Quantitative Analysis for Regent Textile Industries Ltd. 132 155 5.11 Descriptive Analysis for Safa Textiles Ltd. 133 156 5.12 Quantitative Analysis for Safa Textiles Ltd. 133 157 5.13 Descriptive Analysis for Amin Spinning Mills Ltd. 134 158 5.14 Quantitative Analysis for Amin Spinning Mills Ltd. 134 159 5.15 Descriptive Analysis for Mehr Dastagir Textile Mills Ltd. 135 160 5.16 Quantitative Analysis for Mehr Dastagir Textile Mills Ltd. 135 161 5.17 Descriptive Analysis for Bannu Woolen Mills Ltd. 136 162 5.18 Quantitative Analysis for Bannu Woolen Mills Ltd. 136 163 5.19 Descriptive Analysis for Kashmir Polytex Ltd. 137 164 5.20 Quantitative Analysis for Kashmir Polytex Ltd. 137 165 5.21 Descriptive Analysis for Moonlite (Pak) Ltd. 138 166 5.22 Quantitative Analysis for Moonlite (Pak) Ltd. 138 167 5.23 Descriptive Analysis for Bawany Air Products Ltd. 139 168 5.24 Quantitative Analysis for Bawany Air Products Ltd. 139 169 5.25 Descriptive Analysis for Data Agro Ltd. 140 170 5.26 Quantitative Analysis for Data Agro Ltd. 140 171 5.27 Descriptive Analysis for Leiner Pak Gelatine Ltd. 141 172 5.28 Quantitative Analysis for Leiner Pak Gelatine Ltd. 141 173 5.29 Descriptive Analysis for Sardar Chemical Industries Ltd. 142 174 5.30 Quantitative Analysis for Sardar Chemical Industries Ltd. 142 175 5.31 Descriptive Analysis for Bela Automotives Ltd. 143

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176 5.32 Quantitative Analysis for Bela Automotives Ltd. 143 177 5.33 Descriptive Analysis for Johnson & Philips (Pakistan) Ltd. 144 178 5.34 Quantitative Analysis for Johnson & Philips (Pakistan) Ltd. 144 179 5.35 Descriptive Analysis for The Climax Engineering Company Ltd. 145 180 5.36 Quantitative Analysis for The Climax Engineering Company Ltd. 145 181 5.37 Descriptive Analysis for Transmission Engineering Industries Ltd. 146 182 5.38 Quantitative Analysis for Transmission Engineering Industries Ltd. 146 183 5.39 Descriptive Analysis for Dadabhoy Sack Ltd. 147 184 5.40 Quantitative Analysis for Dadabhoy Sack Ltd. 147 185 5.41 Descriptive Analysis for Pakistan Paper Products Ltd. 148 186 5.42 Quantitative Analysis for Pakistan Paper Products Ltd. 148 187 5.43 Descriptive Analysis for Ideal Energy Ltd. 149 188 5.44 Quantitative Analysis for Ideal Energy Ltd. 149 189 5.45 Descriptive Analysis for S.G. Power Ltd. 150 190 5.46 Quantitative Analysis for S.G. Power Ltd. 150 191 5.47 Descriptive Analysis for Khyber Tobacco Company Ltd. 151 192 5.48 Quantitative Analysis for Khyber Tobacco Company Ltd. 151 193 5.49 Descriptive Analysis for Sarhad Cigarette Industries Ltd. 152 194 5.50 Quantitative Analysis for Sarhad Cigarette Industries Ltd. 152 195 5.51 Descriptive Analysis for Amin Fabrics Ltd. 153 196 5.52 Quantitative Analysis for Amin Fabrics Ltd. 153 197 5.53 Descriptive Analysis for Suhail Jute Mills Ltd. 154 198 5.54 Quantitative Analysis for Suhail Jute Mills Ltd. 154 199 5.55 Descriptive Analysis for Kakakhel Pakistan Ltd. 155 200 5.56 Quantitative Analysis for Kakakhel Pakistan Ltd. 155 201 5.57 Descriptive Analysis for Al-Khair Gadoon Ltd. 156 202 5.58 Quantitative Analysis for Al-Khair Gadoon Ltd. 156 203 5.59 Descriptive Analysis for Diamond Industries Ltd. 157 204 5.60 Quantitative Analysis for Diamond Industries Ltd. 157 205 5.61 Descriptive Analysis for Goodluck Industries Ltd. 158 206 5.62 Quantitative Analysis for Goodluck Industries Ltd. 158 207 5.63 Descriptive Analysis for Grays Of Cambridge (Pakistan) Ltd. 159 208 5.64 Quantitative Analysis for Grays Of Cambridge (Pakistan) Ltd. 159 209 5.65 Descriptive Analysis for Haji Dossa Ltd. 160 210 5.66 Quantitative Analysis for Haji Dossa Ltd. 160 211 5.67 Descriptive Analysis for Hashimi Can Company Ltd. 161 212 5.68 Quantitative Analysis for Hashimi Can Company Ltd. 161 213 5.69 Descriptive Analysis for Indus Fruit Products Ltd. 162 214 5.70 Quantitative Analysis for Indus Fruit Products Ltd. 162 215 5.71 Descriptive Analysis for Leather Up Ltd. 163 216 5.72 Quantitative Analysis for Leather Up Ltd. 163 217 5.73 Descriptive Analysis for Mandviwala Mauser Plastic Industries Ltd. 164 218 5.74 Quantitative Analysis for Mandviwala Mauser Plastic Industries Ltd. 164 219 5.75 Descriptive Analysis for Pakistan House International Ltd. 165 220 5.76 Quantitative Analysis for Pakistan House International Ltd. 165

xvi

221 5.77 Descriptive Analysis for Quice Food Industries Ltd. 166 222 5.78 Quantitative Analysis for Quice Food Industries Ltd. 166 223 5.79 Descriptive Analysis for Syed Match Company Ltd. 167 224 5.80 Quantitative Analysis for Syed Match Company Ltd. 167 225 5.81 Descriptive Analysis for Azgard Nine Ltd. 168 226 5.82 Quantitative Analysis for Azgard Nine Ltd. 168 227 5.83 Descriptive Analysis for Colony Textile Mills Ltd. 169 228 5.84 Quantitative Analysis for Colony Textile Mills Ltd. 169 229 5.85 Descriptive Analysis for Dewan Textile Mills Ltd. 170 230 5.86 Quantitative Analysis for Dewan Textile Mills Ltd. 170 231 5.87 Descriptive Analysis for Faisal Spinning Mills Ltd. 171 232 5.88 Quantitative Analysis for Faisal Spinning Mills Ltd. 171 233 5.89 Descriptive Analysis for Fateh Textile Mills Ltd. 172 234 5.90 Quantitative Analysis for Fateh Textile Mills Ltd. 172 235 5.91 Descriptive Analysis for Fatima Enterprises Ltd. 173 236 5.92 Quantitative Analysis for Fatima Enterprises Ltd. 173 237 5.93 Descriptive Analysis for Fazal Cloth Mills Ltd. 174 238 5.94 Quantitative Analysis for Fazal Cloth Mills Ltd. 174 239 5.95 Descriptive Analysis for Gadoon Textile Mills Ltd. 175 240 5.96 Quantitative Analysis for Gadoon Textile Mills Ltd. 175 241 5.97 Descriptive Analysis for Gul Ahmed Textile Mills Ltd. 176 242 5.98 Quantitative Analysis for Gul Ahmed Textile Mills Ltd. 176 243 5.99 Descriptive Analysis for Gulistan Textile Mills Ltd. 177 244 5.100 Quantitative Analysis for Gulistan Textile Mills Ltd. 177 245 5.101 Descriptive Analysis for Indus Dyeing & Manufacturing Co. Ltd. 178 246 5.102 Quantitative Analysis for Indus Dyeing & Manufacturing Co. Ltd. 178 247 5.103 Descriptive Analysis for Kohinoor Textile Mills Ltd. 179 248 5.104 Quantitative Analysis for Kohinoor Textile Mills Ltd. 179 249 5.105 Descriptive Analysis for Mahmood Textile Mills Ltd. 180 250 5.106 Quantitative Analysis for Mahmood Textile Mills Ltd. 180 251 5.107 Descriptive Analysis for Masood Textile Mills Ltd. 181 252 5.108 Quantitative Analysis for Masood Textile Mills Ltd. 181 253 5.109 Descriptive Analysis for Nishat (Chunian) Ltd. 182 254 5.110 Quantitative Analysis for Nishat (Chunian) Ltd. 182 255 5.111 Descriptive Analysis for Nishat Mills Ltd. 183 256 5.112 Quantitative Analysis for Nishat Mills Ltd. 183 257 5.113 Descriptive Analysis for Quetta Textile Mills Ltd. 184 258 5.114 Quantitative Analysis for Quetta Textile Mills Ltd. 184 259 5.115 Descriptive Analysis for Reliance Weaving Mills Ltd. 185 260 5.116 Quantitative Analysis for Reliance Weaving Mills Ltd. 185 261 5.117 Descriptive Analysis for Saif Textile Mills Ltd. 186 262 5.118 Quantitative Analysis for Saif Textile Mills Ltd. 186 263 5.119 Descriptive Analysis for Sapphire Fibres Ltd. 187 264 5.120 Quantitative Analysis for Sapphire Fibres Ltd. 187 265 5.121 Descriptive Analysis for Sapphire Textile Mills Ltd. 188

xvii

266 5.122 Quantitative Analysis for Sapphire Textile Mills Ltd. 188 267 5.123 Descriptive Analysis for Suraj Cotton Mills Ltd. 189 268 5.124 Quantitative Analysis for Suraj Cotton Mills Ltd. 189 269 5.125 Descriptive Analysis for The Crescent Textile Mills Ltd. 190 270 5.126 Quantitative Analysis for The Crescent Textile Mills Ltd. 190 271 5.127 Descriptive Analysis for Al-Abid Silk Mills Ltd. 191 272 5.128 Quantitative Analysis for Al-Abid Silk Mills Ltd. 191 273 5.129 Descriptive Analysis for Dewan Salman Fibre Ltd. 192 274 5.130 Quantitative Analysis for Dewan Salman Fibre Ltd. 192 275 5.131 Descriptive Analysis for Gatron (Industries) Ltd. 193 276 5.132 Quantitative Analysis for Gatron (Industries) Ltd. 193 277 5.133 Descriptive Analysis for Ibrahim Fibres Ltd. 194 278 5.134 Quantitative Analysis for Ibrahim Fibres Ltd. 194 279 5.135 Descriptive Analysis for Liberty Mills Ltd. 195 280 5.136 Quantitative Analysis for Liberty Mills Ltd. 195 281 5.137 Descriptive Analysis for Rupali Polyester Ltd. 196 282 5.138 Quantitative Analysis for Rupali Polyester Ltd. 196 283 5.139 Descriptive Analysis for Abbott Laboratories (Pakistan) Ltd. 197 284 5.140 Quantitative Analysis for Abbott Laboratories (Pakistan) Ltd. 197 285 5.141 Descriptive Analysis for Berger Paints Pakistan Ltd. 198 286 5.142 Quantitative Analysis for Berger Paints Pakistan Ltd. 198 287 5.143 Descriptive Analysis for Clariant Pakistan Ltd. 199 288 5.144 Quantitative Analysis for Clariant Pakistan Ltd. 199 289 5.145 Descriptive Analysis for Colgate-Palmolive (Pakistan) Ltd. 200 290 5.146 Quantitative Analysis for Colgate-Palmolive (Pakistan) Ltd. 200 291 5.147 Descriptive Analysis for Dawood Hercules Chemicals Ltd. 201 292 5.148 Quantitative Analysis for Dawood Hercules Chemicals Ltd. 201 293 5.149 Descriptive Analysis for Engro Chemical Pakistan Ltd. 202 294 5.150 Quantitative Analysis for Engro Chemical Pakistan Ltd. 202 295 5.151 Descriptive Analysis for Fauji Fertilizer Bin Qasim Ltd. 203 296 5.152 Quantitative Analysis for Fauji Fertilizer Bin Qasim Ltd. 203 297 5.153 Descriptive Analysis for Fauji Fertilizer Company Ltd. 204 298 5.154 Quantitative Analysis for Fauji Fertilizer Company Ltd. 204 299 5.155 Descriptive Analysis for Glaxosmithkline (Pakistan) Ltd. 205 300 5.156 Quantitative Analysis for Glaxosmithkline (Pakistan) Ltd. 205 301 5.157 Descriptive Analysis for ICI Pakistan Ltd. 206 302 5.158 Quantitative Analysis for ICI Pakistan Ltd. 206 303 5.159 Descriptive Analysis for Pakistan PTA Ltd. 207 304 5.160 Quantitative Analysis for Pakistan PTA Ltd. 207 305 5.161 Descriptive Analysis for Sanofi Aventis (Aventis Pharma) 208 306 5.162 Quantitative Analysis for Sanofi Aventis (Aventis Pharma) 208 307 5.163 Descriptive Analysis for Searle Pakistan Ltd. 209 308 5.164 Quantitative Analysis for Searle Pakistan Ltd. 209 309 5.165 Descriptive Analysis for Sitara Chemical Industries Ltd. 210 310 5.166 Quantitative Analysis for Sitara Chemical Industries Ltd. 210

xviii

311 5.167 Descriptive Analysis for Al-Ghazi Tractors Ltd. 211 312 5.168 Quantitative Analysis for Al-Ghazi Tractors Ltd. 211 313 5.169 Descriptive Analysis for Atlas Honda Ltd. 212 314 5.170 Quantitative Analysis for Atlas Honda Ltd. 212 315 5.171 Descriptive Analysis for Crescent Steel & Allied Products Ltd. 213 316 5.172 Quantitative Analysis for Crescent Steel & Allied Products Ltd. 213 317 5.173 Descriptive Analysis for Dewan Farooque Motors Ltd. 214 318 5.174 Quantitative Analysis for Dewan Farooque Motors Ltd. 214 319 5.175 Descriptive Analysis for General Tyre & Rubber Co. Ltd. 215 320 5.176 Quantitative Analysis for General Tyre & Rubber Co. Ltd. 215 321 5.177 Descriptive Analysis for Ghandhara Nissan Ltd. 216 322 5.178 Quantitative Analysis for Ghandhara Nissan Ltd. 216 323 5.179 Descriptive Analysis for Hinopak Motors Ltd. 217 324 5.180 Quantitative Analysis for Hinopak Motors Ltd. 217 325 5.181 Descriptive Analysis for Honda Atlas Cars (Pakistan) Ltd. 218 326 5.182 Quantitative Analysis for Honda Atlas Cars (Pakistan) Ltd. 218 327 5.183 Descriptive Analysis for Indus Motor Company Ltd. 219 328 5.184 Quantitative Analysis for Indus Motor Company Ltd. 219 329 5.185 Descriptive Analysis for International Industries Ltd. 220 330 5.186 Quantitative Analysis for International Industries Ltd. 220 331 5.187 Descriptive Analysis for Millat Tractors Ltd. 221 332 5.188 Quantitative Analysis for Millat Tractors Ltd. 221 333 5.189 Descriptive Analysis for Pak Elektron Ltd. 222 334 5.190 Quantitative Analysis for Pak Elektron Ltd. 222 335 5.191 Descriptive Analysis for Pak Suzuki Motor Company Ltd. 223 336 5.192 Quantitative Analysis for Pak Suzuki Motor Company Ltd. 223 337 5.193 Descriptive Analysis for Pakistan Cables Ltd. 224 338 5.194 Quantitative Analysis for Pakistan Cables Ltd. 224 339 5.195 Descriptive Analysis for Siemens (Pakistan) Engineering Co. Ltd. 225 340 5.196 Quantitative Analysis for Siemens (Pakistan) Engineering Co. Ltd. 225 341 5.197 Descriptive Analysis for Dewan Sugar Mills Ltd. 226 342 5.198 Quantitative Analysis for Dewan Sugar Mills Ltd. 226 343 5.199 Descriptive Analysis for Habib Sugar Mills Ltd. 227 344 5.200 Quantitative Analysis for Habib Sugar Mills Ltd. 227 345 5.201 Descriptive Analysis for JDW Sugar Mills Ltd. 228 346 5.202 Quantitative Analysis for JDW Sugar Mills Ltd. 228 347 5.203 Descriptive Analysis for Shakarganj Mills Ltd. 229 348 5.204 Quantitative Analysis for Shakarganj Mills Ltd. 229 349 5.205 Descriptive Analysis for Century Paper & Board Mills Ltd. 230 350 5.206 Quantitative Analysis for Century Paper & Board Mills Ltd. 230 351 5.207 Descriptive Analysis for Packages Ltd. 231 352 5.208 Quantitative Analysis for Packages Ltd. 231 353 5.209 Descriptive Analysis for Bestway Cement Ltd. 232 354 5.210 Quantitative Analysis for Bestway Cement Ltd. 232 355 5.211 Descriptive Analysis for Cherat Cement Company Ltd. 233

xix

356 5.212 Quantitative Analysis for Cherat Cement Company Ltd. 233 357 5.213 Descriptive Analysis for D.G. Khan Cement Company Ltd. 234 358 5.214 Quantitative Analysis for D.G. Khan Cement Company Ltd. 234 359 5.215 Descriptive Analysis for Dewan (Pakland) Cement Ltd. 235 360 5.216 Quantitative Analysis for Dewan (Pakland) Cement Ltd. 235 361 5.217 Descriptive Analysis for Fauji Cement Company Ltd. 236 362 5.218 Quantitative Analysis for Fauji Cement Company Ltd. 236 363 5.219 Descriptive Analysis for Fecto Cement Ltd. 237 364 5.220 Quantitative Analysis for Fecto Cement Ltd. 237 365 5.221 Descriptive Analysis for Lucky Cement Ltd. 238 366 5.222 Quantitative Analysis for Lucky Cement Ltd. 238 367 5.223 Descriptive Analysis for Maple Leaf Cement Factory Ltd. 239 368 5.224 Quantitative Analysis for Maple Leaf Cement Factory Ltd. 239 369 5.225 Descriptive Analysis for Pioneer Cement Ltd. 240 370 5.226 Quantitative Analysis for Pioneer Cement Ltd. 240 371 5.227 Descriptive Analysis for Attock Refinery Ltd. 241 372 5.228 Quantitative Analysis for Attock Refinery Ltd. 241 373 5.229 Descriptive Analysis for Japan Power Generation Ltd. 242 374 5.230 Quantitative Analysis for Japan Power Generation Ltd. 242 375 5.231 Descriptive Analysis for Karachi Electric Supply Corporation Ltd. 243 376 5.232 Quantitative Analysis for Karachi Electric Supply Corporation Ltd. 243 377 5.233 Descriptive Analysis for Kohinoor Energy Ltd. 244 378 5.234 Quantitative Analysis for Kohinoor Energy Ltd. 244 379 5.235 Descriptive Analysis for Mari Gas Company Ltd. 245 380 5.236 Quantitative Analysis for Mari Gas Company Ltd. 245 381 5.237 Descriptive Analysis for National Refinery Ltd. 246 382 5.238 Quantitative Analysis for National Refinery Ltd. 246 383 5.239 Descriptive Analysis for Pakistan Oilfields Ltd. 247 384 5.240 Quantitative Analysis for Pakistan Oilfields Ltd. 247 385 5.241 Descriptive Analysis for Pakistan Refinery Ltd. 248 386 5.242 Quantitative Analysis for Pakistan Refinery Ltd. 248 387 5.243 Descriptive Analysis for Pakistan State Oil Company Ltd. 249 388 5.244 Quantitative Analysis for Pakistan State Oil Company Ltd. 249 389 5.245 Descriptive Analysis for Shell Pakistan Ltd. 250 390 5.246 Quantitative Analysis for Shell Pakistan Ltd. 250 391 5.247 Descriptive Analysis for Southern Electric Power Co. Ltd. 251 392 5.248 Quantitative Analysis for Southern Electric Power Co. Ltd. 251 393 5.249 Descriptive Analysis for Sui Northern Gas Pipelines Ltd. 252 394 5.250 Quantitative Analysis for Sui Northern Gas Pipelines Ltd. 252 395 5.251 Descriptive Analysis for Sui Southern Gas Company Ltd. 253 396 5.252 Quantitative Analysis for Sui Southern Gas Company Ltd. 253 397 5.253 Descriptive Analysis for The Hub Power Company Ltd. 254 398 5.254 Quantitative Analysis for The Hub Power Company Ltd. 254 399 5.255 Descriptive Analysis for Pakistan International Airlines Co. Ltd. 255 400 5.256 Quantitative Analysis for Pakistan International Airlines Co. Ltd. 255

xx

401 5.257 Descriptive Analysis for Pakistan National Shipping Co. 256 402 5.258 Quantitative Analysis for Pakistan National Shipping Co. 256 403 5.259 Descriptive Analysis for Pakistan Telecommunication Co. Ltd. 257 404 5.260 Quantitative Analysis for Pakistan Telecommunication Co. Ltd 257 405 5.261 Descriptive Analysis for Lakson Tobacco Company Ltd. 258 406 5.262 Quantitative Analysis for Lakson Tobacco Company Ltd. 258 407 5.263 Descriptive Analysis for Pakistan Tobacco Company Ltd. 259 408 5.264 Quantitative Analysis for Pakistan Tobacco Company Ltd. 259 409 5.265 Descriptive Analysis for Thal Jute Mills Ltd. 260 410 5.266 Quantitative Analysis for Thal Jute Mills Ltd. 260 411 5.267 Descriptive Analysis for Bata Pakistan Ltd. 261 412 5.268 Quantitative Analysis for Bata Pakistan Ltd. 261 413 5.269 Descriptive Analysis for Ghani Glass Ltd. 262 414 5.270 Quantitative Analysis for Ghani Glass Ltd. 262 415 5.271 Descriptive Analysis for National Foods Ltd. 263 416 5.272 Quantitative Analysis for National Foods Ltd. 263 417 5.273 Descriptive Analysis for Nestlé Pakistan Ltd. 264 418 5.274 Quantitative Analysis for Nestlé Pakistan Ltd. 264 419 5.275 Descriptive Analysis for Pakistan Services Ltd. 265 420 5.276 Quantitative Analysis for Pakistan Services Ltd. 265 421 5.277 Descriptive Analysis for Rafhan Maize Products Co. Ltd. 266 422 5.278 Quantitative Analysis for Rafhan Maize Products Co. Ltd. 266 423 5.279 Descriptive Analysis for Service Industries Ltd. 267 424 5.280 Quantitative Analysis for Service Industries Ltd. 267 425 5.281 Descriptive Analysis for Tri-Pack Films Ltd. 268 426 5.282 Quantitative Analysis for Tri-Pack Films Ltd. 268 427 5.283 Descriptive Analysis for Unilever Pakistan Foods Ltd. 269 428 5.284 Quantitative Analysis for Unilever Pakistan Foods Ltd. 269 429 5.285 Descriptive Analysis for Unilever Pakistan Ltd. 270 430 5.286 Quantitative Analysis for Unilever Pakistan Ltd. 270 431 5.287 Correlation Statistics of ROA & Other Variables 271 432 5.288 Correlation Statistics of OPS & Other Variables 272 433 5.289 Descriptive Analysis for Sample 1 287 434 5.290 Descriptive Analysis for Sample 2 289 435 5.291 Quantitative Analysis: The Correlation Matrix for Sample 1 294 436 5.292 Quantitative Analysis: The Correlation Matrix for Sample 2 298 437 5.293 Linear Regressions for Sample 1 with ‘ROA’ as Dependent Variable 301 438 5.294 Linear Regressions for Sample 2 with ‘ROA’ as Dependent Variable 304 439 5.295 Linear Regressions for Sample 1 with ‘OPS’ as Dependent Variable 307 440 5.296 Linear Regressions for Sample 2 with ‘OPS’ as Dependent Variable 310

xxi

ABSTRACT

Working Capital Management has an overriding impact on a firm’s profit performance.

However, the profitability of large firms, unlike small ones, might show a different

degree of sensitivity to the efficient management of working capital. Presumably small

firms and large firms are different from each other in that working capital management

may affect more (or less) the profitability of one or the other. One wonders as to which

type of firms (small or large) exhibit more escalation in their profitability as a result of a

decent management of their working capital. Exploring the answer to this query is the

basic aim of this research dissertation. To do that, effect of working capital management

was determined on the profitability of the two forms of organizations separately and then

the results so derived were compared in order to determine the difference in the possible

effect of WCM on profitability of the two organization types, if any.

To serve the purpose, two distinct samples were made, one having all the SME’s listed in

the Karachi Stock Exchange and the other including the largest non-financial firms of the

country listed in KSE, the data of which was available. Related data was gathered for

firms in both samples for a period of six years from 2003 to 2008.

All the relevant and the required financial information was acquired from an official

document titled, “Balance Sheet Analysis of Joint Stock Companies Listed on the

Karachi Stock Exchange --- (2003-2008)”, formally published by the Statistics and DWH

Department of the State Bank of Pakistan (SBP). This document contained the Balance

Sheet analysis of all the non-financial firms listed on the Karachi Stock Exchange as at

June 30, 2008. Hence the research was entirely based on the Secondary data. It should be

stated that the financial corporations like Banking Companies, Insurance Companies,

Leasing Companies and Modarabas etc. were not included in this study.

A total of 40 (out of 93) small firms were included in the first sample (known as Sample

1) for six years which led to 240 firm-year observations. Similarly, 103 (out of 343) large

companies were incorporated in the second sample (known as Sample 2) for six

consecutive years leading to 618 firm-year observations. Working Capital Management

xxii

was measured by the Cash Conversion Cycle. As for the measurement of profitability,

two variables were used; the Return on Assets and the Operating Profit to Sales.

The Pearson Product Moment Coefficient of Correlation and the Linear Regression

Analysis were used to examine the relationship between the Cash Conversion Cycle and

that of the profitability variables. The correlation analyses were separately made for all

the firms included in the two samples individually and then for the pooled data of each

sample collectively so as to make a clear comparison. As for the Regression, two separate

analyses were made, one detecting the influence of working capital management on the

Return on Assets, and the other finding out the impact of WCM on the Operating Profit

to Sales for both the samples.

Results of the individual Correlation analysis for the two samples did not present a clear

picture of whether the indicators of WCM had more, or less, influence on the profitability

of small, or large, firms or vice versa. However, a comparison of the results of the Pooled

Correlation analysis of the two samples suggested that the indicators of working capital

management had a more visible impact on the profitability of firms of relatively larger

size.

In the first Regression analysis (called the Regression Analysis ‘A’), no significant

associations were detected between the indicators of WCM and the Return on Assets for

Sample 1. As for Sample 2, one of the WCM indicators, however, was found to be

negatively and significantly related with the Return on Assets.

The Regression analysis ‘B’, nonetheless, brought very clear demarcation between the

effects of WCM on the profitability (Operating Profit to Sales) of the two samples. On

the one hand, a very few significant relationships were found between the indicators of

WCM and the profitability for Sample 1. And in contrast, the pooled data of Sample 2

displayed highly significant relationships of Operating Profit to Sales with all the

indicators of working capital management including the Inventory Conversion Period,

Receivable Collection Period, Payable Deferral Period and the Cash Conversion Cycle.

This is a clear indication of the fact that the efficiency of managing working capital has

more constructive effect on the profitability of larger firms. Hence, it is suggested for the

managers of large-sized corporations to redouble their thought on the effective and

vigilant management of their working capital so as to invigorate profitability.

Chapter 1 Introduction

A Comparative Analysis of the Effect of Working Capital Management on the Profitability of Small and Large Companies Listed at Karachi Stock Exchange

1

CHAPTER 1

INTRODUCTION

1.1 BACKGROUND OF THE RESEARCH

Most of the research work being executed in Finance has typically emphasized on Long-

term financial decisions of profit-oriented entities. The long-term financial matters, no

doubt, play a pivotal role in contributing to any company’s future prosperity, but the

short-term financial issues, also, are vital to a company’s steady and consistent growth

and to the smooth functioning of its day-to-day affairs. Put it the other way, it can be held

that while long-term financial decisions decide how a company is going to be in the

coming years or decades, the short-term financial decisions determine the current

financial health and soundness of the company.

Working Capital Management is one of the most imperative and crucial aspects of short-

term financial matters of an organization. According to a host of managers, any short-

term financial decision (taken by an organization) directly affects its working capital

management. Therefore, some authors label short-term financial management as working

capital management. 1

Ross et al defines short term finance as, “Short-term finance is primarily concerned with

the analysis of decisions that affect current assets and current liabilities.”2 The nature and

importance of short-term decisions is also described by Brealey and Myers (1996) as,

“Short-term decisions are easier than long-term decisions---but they are not less

important.”3 This argument is supported by Brigham and Houston in their book,

“Fundamentals of Financial Management” as they claim, “About 60 percent of a typical

financial manager’s time is devoted to working capital management---.”4

Siddiquee and Khan (2009) in their article, “Analyzing Working Capital Performance:

Evidence from Dhaka Stock Exchange (DSE) Ltd.” describe the objective of efficient

working capital management as, “The goal of working capital management is to ensure



2

that a firm is able to continue its operations and that it has sufficient ability to satisfy both

maturing short-term debt and upcoming operational expenses. In the present day context

of rising capital cost and scarce funds, the importance of working capital needs special

emphasis. It has been widely accepted that the profitability of a business concern depends

upon the manner in which its working capital is managed. The inefficient management of

working capital not only reduces profitability but ultimately may also lead a concern to

financial crisis. Every organization, irrespective of its profit orientation, size and nature

of business, needs requisite amount of working capital. The efficient working capital

management is the most crucial factor in maintaining survival, liquidity, solvency and

profitability of the concerned business organization.”5

The importance of an efficient management of working capital is also stressed by Van

Horne and Wachowicz (2000) in their text-book of Financial Management. They argue,

“The management of working capital is important for several reasons. For one thing, the

current assets of a typical manufacturing firm account for over half of its total assets. For

a distribution company, they account for even more. Excessive levels of current assets

can easily result in a firm realizing a substandard return on investment. However, firms

with too few current assets may incur shortages and difficulties in maintaining smooth

operations.”6

So, what is the best level of investment in current assets then? Only a good management

of working capital can decide about it. Hence, Working Capital Management introduces

an optimal level of investment in current assets so as to foster an organization’s

profitability.

1.2 STATEMENT OF THE RESEARCH QUESTION

This research thesis is aimed at determining the upshot of Working Capital Management

on the Profitability of two kinds of organizations separately --- the Small and Medium

Enterprises, and the Large Corporations --- listed at Karachi Stock Exchange. The report

then compares the effects of Working Capital Management on Profitability of the two

forms of organizations mentioned above in order to reveal the difference, if any, in the

respective effects. Besides, an attempt is also made to discretely elucidate the influence

of Liquidity on Profitability of SMEs and that of Large companies both listed at Karachi



3

Stock Exchange and then to compare their respective effects. It is expected that Working

Capital Management might have a more profound impact on the Profitability of small and

medium enterprises than on the performance of larger companies since a substantial

proportion of the total assets of small and medium firms is constituted of the Current

Assets and a sizeable fraction of their total liabilities is consisted of the Current

Liabilities. And, of course, the management of working capital is all about the

management of a firm’s current assets and current liabilities. With this in mind, the

hypotheses for the study are, thus, formulated as follows:

1.3 THE HYPOTHESES

1.3.1 Hypothesis 1

The first hypothesis developed for the study is:

H0-1: Working Capital Management has no relevance to Profitability of Small and

Medium-sized corporations listed at Karachi Stock Exchange.

H1-1: An efficient management of Working Capital may have a significant relationship

with the Profitability of Small and Medium-sized corporations listed at Karachi

Stock Exchange.

1.3.2 Hypothesis 2

The second hypothesis developed for the study is:

H0-2: Working Capital Management has no relevance to Profitability of Large Joint

Stock Companies listed in Karachi Stock Exchange.

H1-2: An efficient management of Working Capital may have a significant relationship

with the Profitability of Large Corporations listed at Karachi Stock Exchange.

1.3.3 Hypothesis 3

The third hypothesis developed for the study is:

H0-3: There is no substantial distinction between the effect of Working Capital

Management on the Profitability of Small and Large Corporations listed at

Karachi Stock Exchange.



4

H1-3: Working Capital Management has a significantly different effect on the

Profitability of Small and Medium Enterprises than of Large Corporations listed

at Karachi Stock Exchange.

1.3.4 Hypothesis 4

The fourth hypothesis developed for the study is:

H0-4: The level of Liquidity has no impact on the Profitability of Small and Medium

Enterprises listed at Karachi Stock Exchange.

H1-4: Liquidity is significantly linked with the Profitability of Small and Medium

Enterprises listed at Karachi Stock Exchange.

1.3.5 Hypothesis 5

The fifth hypothesis developed for the study is:

H0-5: The level of Liquidity has no impact on the Profitability of Large Corporations

listed in Karachi Stock Exchange.

H1-5: Liquidity is significantly related to the Profitability of Large Corporations listed

in Karachi Stock Exchange.

1.3.6 Hypothesis 6

The sixth hypothesis developed for the study is:

H0-6: There is no substantial distinction between the impact of Liquidity on the

Profitability of Small and Medium Enterprises, and that of Large Corporations

listed in Karachi Stock Exchange.

H1-6: Liquidity has a significantly different impact on the Profitability of Small and

Medium Enterprises than of Large Corporations listed in Karachi Stock

Exchange.



5

1.4 OBJECTIVES OF THE STUDY

The primary objectives of this Research Study are:

1. To separately formulate an empirical relationship between Working Capital

Management and Profitability for;

a) Small and Medium-sized firms listed at Karachi Stock Exchange, and

b) Large Complex Corporations listed at Karachi Stock Exchange.

2. To compare the effects of Working Capital Management on Profitability of the

two forms of organizations listed above in order to explore the dissimilarity in the

respective effects, if any.

Besides the primary objectives presented above, the research also aims to;

separately analyze the effects of different components of Working Capital

Management on Profitability of SMEs and that of large companies listed in

Karachi Stock Exchange,

separately formulate a logical relationship between Liquidity and Profitability of

Small and that of Large corporations listed in Karachi Stock Exchange, and

make a comparison of the effects of Liquidity on Profitability of the two distinct

organizations types.

1.5 JUSTIFICATION AND LIKELY BENEFITS

Presumably this dissertation will add to the existing literature as no study has so far been

conducted to determine and compare the effects of Working Capital Management on the

Profitability of Small-sized and Large-sized organizations, and that within the same

region (where all other profit-determining factors are the same). The thesis will

insistently offer a better illustration of whether Working Capital Management varies in its

worth and potential impact for small and large organizations.

Vishnani and Shah (2007) in their article “Impact of Working Capital Management

Policies on Corporate Performance --- An Empirical Study” state, “Though working

capital management is of equal importance for big as well as small companies, but it is of



6

special importance to managers of small sized companies because it is they who strive for

finances and the opportunity cost of finances for them is usually on the higher side.”7

1.6 LIMITATIONS OF THE STUDY

Similar to the majority of research works, this study also carries some inadequacies, a

few of which are described below:

The study is exclusively reliant on the Secondary source of data that includes

“Balance Sheet Analysis of Joint Stock Companies listed in Karachi Stock

Exchange”, a yearly document published by the State Bank of Pakistan. The

accuracy of the results of the study is, therefore, dependent upon the reliability

and correctness of the financial information of firms given in the source of data

mentioned above.

The study merely covers a period of six years for data analyses ranging from the

year 2003 to 2008. The reason for choosing a shorter period for data analyses was

that most of the firms listed at Karachi Stock Exchange had financial information

available for that period only. A study incorporating a larger span of time, i.e.,

the one analyzing financial data for added number of years, could, thus, come up

with somewhat different, and possibly more accurate, findings.

1.7 CONJECTURAL FRAMEWORK

The importance of skillful management of working capital is thoroughly and repeatedly

stressed by most of the researchers in the present day. For instance, Rehman and Nasr

(2007) remark, “Working capital management is a very important component of

corporate finance because it directly affects the liquidity and profitability of a company.”8

Smith (1980) was probably the first to hint at the importance of working capital

management in augmenting profitability of firms, as he said, “The management of short-

term assets is as important as management of long-term financial assets, since efficient

management of short-term investments directly contribute to the maximization of a firm’s

profitability and total performance.”9



7

The susceptibility of working capital management was also accentuated by Joshi in 1995

who stated, “Working Capital Management is a very sensitive area in the field of

financial management.”10 Earlier, Rao (1989), in his book “Fundamentals of Financial

Management”, mentioned, “Many surveys have indicated that managers spend

considerable time on day-to-day problems that involve working capital decisions. One

reason for this is that current assets are short-lived investments that are continually being

converted into other asset types.”11

Maintaining equilibrium between profitability and liquidity is yet another challenge for a

short-term financial manager. In this context, Christopher and Kamalavalli (2009)

comment, “Though the ultimate objective of any firm is to maximize profit, preserving

liquidity is equally an important objective. The problem is that increase in profits at the

cost of liquidity can bring serious problems to a firm and therefore, there must be a trade-

off between these two objectives. If a firm does not care about profit, it cannot survive for

a longer period. On the other hand, a firm that neglects liquidity faces the problem of

insolvency. For these reasons, working capital management should be given proper

consideration; else it will ultimately affect the profitability of a firm. The efficient

management of working capital is likely to yield significant results and its neglect can be

highly dangerous to any firm.”12

A firm needs to maintain an optimal level of current assets if it intends to lever up

profitability. According to Van Horne and Wachowicz (2000), “Excessive levels of

current assets can easily result in a firm realizing a low return on investment. However,

firms with too small investment in current assets may incur shortages and difficulties in

maintaining smooth operations”.13 The importance of managing current assets was also

emphasized by Smith and Begemann (1997) as they said, “a large number of business

failures have been attributed to the inability of financial managers to plan and control

properly the current assets and current liabilities of their respective firms”.14

Eljelly (2004) also stressed on the need to invest optimally in current assets and

reasonably manage the current liabilities. According to him, “Efficient working capital

management involves planning and controlling current assets and current liabilities in a



8

manner that eliminates the risk of inability to meet due short term obligations on the one

hand and avoid excessive investment in these assets on the other.”15

The relationship of profitability with current assets and current liabilities was described

by Van Horne in 1969 as, “Profitability suggests a low proportion of current assets to

total assets and high proportion of current liabilities to total liabilities”.16

The influence of working capital on profitability and risk was best illustrated by Dash and

Rani in their article, “A Liquidity-Profitability Trade-Off Model for Working Capital

Management”. In their words, “The trade-off between profitability and risk is the key to

working capital management. Too little working capital increases profit but reduces

liquidity, as current assets are more expensive than fixed assets.”17

But how should working capital management be measured as a variable affecting

profitability of a firm? The best known variable so far for assessing working capital

management is the Cash Conversion Cycle. Lazaridis and Tryfonidis (2006) argue,

“Since working capital management is best described by the cash conversion cycle, we

will try to establish a link between profitability and management of the cash conversion

cycle. This simple equation encompasses all three very important aspects of working

capital management. It is an indication of how long a firm can carry on if it was to stop

its operation or it indicates the time gap between purchase of goods and collection of

sales.”18 Measured as Receivable Collection Period plus Inventory Conversion Period

minus Payable Deferral Period, the Cash Conversion Cycle is used for assessing how

managers have so far attempted to manage their working capital and what impact has it

had on the profitability of their firms.

Cash conversion cycle is known to have a negative relationship with a firm’s

profitability. The shorter the cash conversion cycle, the higher will be a firm’s

profitability. In the words of Nobanee and Al-Hajjar (2009), “Shorter cash conversion

cycle could be associated with high profitability because it improves the efficiency of

using the working capital.”19

The need for shortening of Cash Conversion Cycle was also stressed by Moss and Stine

(1993) who observed that, “Shortening the cash conversion cycle improves profitability

of a firm because the longer the cash conversion cycle the greater the need for expensive



9

external financing. Therefore, by reducing the time that cash are tied up in working

capital, a firm can operate more efficiently”.20

Cash Conversion Cycle may be shortened by decreasing the Inventory and Receivable

Conversion periods and lengthening the Payable Conversion period. Shortening the

Inventory Conversion Period reduces the costs of holding Inventory but it also carries the

parallel risk of a stock out, especially in days of rising demand for the product. Similarly,

reducing the Receivable Collection Period prevents the unnecessary locking up of money,

and hence more cash is available for other activities. However, a shorter Receivable

Collection Period would also mean reduced sales level since customers will no more have

the option of assessing the quality of the product they have purchased before making

payments. Finally, lengthening the Payable Deferral Period would enable the firm itself

to appraise or judge the quality of the material supplied to it by its suppliers and also to

prevent the early trapping up of money. However, delaying payments to suppliers might

prove to be costly if the firm loses the opportunity of availing the discount offered on

early payment of bills. Moreover, an excessive delay of payables might also lead to a

spoiled credit repute of the firm.

Nobanee (2009), however, emphasized on the need to identify optimal levels of

inventory, receivables and payables so as to minimize the holding and opportunity costs

and then reassessing the cash conversion cycle accordingly which he termed as the

“Optimal Cash Conversion Cycle”. In his opinion, shortening the cash conversion cycle

was not always beneficial for a firm. In his article “Working Capital Management and

Firm's Profitability: An Optimal Cash Conversion Cycle”, he wrote, “The traditional link

between the cash conversion cycle and the firm's profitability is that shortening the cash

conversion cycle increases firm's profitability. On the other hand shortening the cash

conversion cycle could harm the firm’s operations and reduces profitability. This could

happen when taking actions to reduce the inventory conversion period, a firm could face

inventory shortages; when reducing the receivable collection period a firm could lose its

good credit customers; and when lengthening the payable deferral period a firm could

harm its own credit reputation.”21



10

1.8 ORGANIZATION OF THE DISSERTATION

The thesis is comprised of six chapters:

Chapter one gives an Introduction to the Dissertation, discussing the background

of the study, purpose, significance, hypotheses developed, limitations of the study

and the conjectural framework.

Chapter two encloses a review of the beforehand Literature relevant to the study.

Previously written research works on the same issue are thrashed out in detail and

their findings thoroughly examined.

The third chapter includes the Plan of Work and the Research Methodology. It

gives details of how the research is being executed and what is the sample for the

study. It also discusses the variables used and the statistical tools employed in

conducting the research.

The fourth chapter holds all the data being gathered in the research process. The

required financial information of all the sample firms is displayed in a logical

manner using tables in this segment of the dissertation.

The fifth chapter analyzes the gathered data thoroughly by applying statistical

tools on it in order to arrive at the findings of the study.

The sixth, and the final, chapter provides the conclusive comments.

1.9 KEY TERMS AND DEFINITIONS

Following are the key terms used in the study with their definitions:

1.9.1 Working Capital Management

“Working capital management is concerned with the problems that arise in attempting to

manage the current assets, the current liabilities and the interrelationship that exists

between them”, write Khan and Jain in their book, “Financial Management, Text and

Problems”.22

Brigham and Gapenski (1997), in their book “Financial Management, Theory and

Practice” define Working Capital Management as, “Working capital management



11

involves the administration, within policy guidelines, of current assets and current

liabilities.”23

1.9.2 Cash Conversion Cycle

The term “Cash Conversion Cycle” has been defined by different authors in various

ways. For example, according to Moss and Stine (1993), “The cash conversion cycle of a

firm can be defined as the length of time between cash payments for purchase of raw

materials and the collection of receivables associated with the sale of the finished

goods.”24 Stewart, in 1995, explained Cash Conversion Cycle as “A composite metric

describing the average days required to turn a dollar invested in raw materials into a

dollar collected from a customer”.25 Besley and Brigham (2005) defined Cash

Conversion Cycle as “The length of time from the payment for the purchase of raw

materials to manufacture a product until the collection of account receivable associated

with the sale of the product.”26 Keown et al (2003) described Cash Conversion Cycle as

“The sum of days of sales outstanding (average collection period) and days of sales in

inventory less days of payables outstanding.”27

1.9.3 Inventory Conversion Period

Inventory Conversion Period is the number of days (on average) for which a firm retains

its Inventory. Other terms used for Inventory Conversion Period are Days in Inventory,

Inventory Holding Period, Number of Days Inventory, and Inventory Turnover in Days.

1.9.4 Receivable Collection Period

Receivable Collection Period is the number of days (on average) for which a firm’s

Receivables remain unsettled. Other terms used for Receivable Collection Period are

Days Sales Outstanding, Receivables Conversion Period, Number of Days Accounts

Receivable, Average Receivable Collection Period, Average Collection Period, Days

Sales in Accounts Receivable, Accounts Receivable Collection Period, and Debtors

Collection Period.



12

1.9.5 Payable Deferral Period

Payable Deferral Period is the number of days (on average) it takes a firm to pay off its

credit purchases. Other terms used for Payable Deferral Period are Days Payable

Outstanding, Payables Conversion Period, Average Payment Period, Accounts Payable

Payment Period, Average Days Payable, Number of Days Accounts Payable, and

Creditors Payment Period.

1.9.6 Liquidity

Liquidity is the competence of a business entity to recompense for its instantaneous and

interim debt commitments.

1.9.7 Profitability

Profitability is the capability of any business concern to earn a profit. Profit refers to the

generation of financial gain by any business to serve the purpose of subsidizing its

owners.

According to Vishnani and Shah (2007), “Profitability is the rate of return on company’s

investment.”28



13

END NOTES

1 Ross, Stephen A., Westerfield, Randolph W., Jordan, Bradford D. “Fundamentals of Corporate Finance”. Sixth Edition. The McGraw-Hill/Irwin Inc. USA. p. 639.

2 Ibid. p. 639.

3 Brealey, Richard A., Myers, Stewart C. (1996). “Principals of Corporate Finance”. Fifth Edition. The McGraw-Hill Companies Inc. USA. p. 822.

4 Brigham, Eugene F., Houston, Joel F. “Fundamentals of Financial Management”. Tenth Edition. South Western Educational Publishing. USA. p. 564.

5 Siddiquee, Mohammad Moniruzzaman & Khan, Shaem Mahmud., (April 07, 2009). “Analyzing Working Capital Performance: Evidence from Dhaka Stock Exchange (DSE) Ltd.” Dhaka-1342, Bangladesh. [Online] Available: http://ssrn.com/abstract=1374210

6 Van Horne, James C., Wachowicz, JR, John M., (2000). “Fundamentals of Financial Management”. Eleventh Edition. Prentice Hall, Inc. p. 210.

7 Vishnani, Sushma & Shah, Bhupesh Kr. (2007). “Impact of Working Capital Management Policies on Corporate Performance--- An Empirical Study”. Global Business Review. Vol. 8. p. 267. [Online] Available: http://gbr.sagepub.com/cgi/content/abstract/8/2/267

8 Rehman, Abdul & Nasr, Mohamed., (March 2007). “Working Capital Management and Profitability – Case of Pakistani Firms”. International Review of Business Research Papers. Vol. 3. No.1. pp.279 – 300.

9 Smith K., (1980). “Profitability versus Liquidity Tradeoffs: Readings on the Management of Working Capital.” New York: St. Paul, West Publishing Company.

10 Joshi, P. V., (1995). “Working Capital Management under Inflation”. 1st Edition. Anmol Publishers. pp. 20 – 93.

11 Rao, R. K. S. (1989). “Fundamentals of Financial Management”. 3rd Edition. Macmillan Publishers. pp. 550-644.

12 Christopher, S. Benjamin and Kamalavalli, A. L., (January, 22 2009). “Sensitivity of Profitability to Working Capital Management in Indian Corporate Hospitals”. [Online] Available: http://ssrn.com/abstract=1331500

13 Van Horne, James C., Wachowicz, JR, John M., (2000). Op.cit.

14 Smith, M. Beaumont, Begemann, E., (1997). “Measuring Association between Working Capital and Return on Investment”. South African Journal of Business Management. Vol. 28 (1). pp. 1 – 9.

15 Eljelly, A. M. A., (2004). “Liquidity-Profitability Tradeoff: An Empirical Investigation in an Emerging Market”. International Journal of Commerce and Management. Vol. 14. No. 2. pp. 48- 61.

16 Van Horne, James C., (Winter 1969)."A Risk-Return Analysis of a Firm's Working Capital Position." The Engineering Economist. 14. pp. 71 - 88.

17 Dash, Mihir and Ravipati, Rani., (May 10, 2009). “A Liquidity-Profitability Trade-Off Model for Working Capital Management”. [Online] Available: http://ssrn.com/abstract=1408722



14

18 Lazaridis, Ioannis & Tryfonidis, Dimitrios., (January-June 2006). “The relationship between working capital management and profitability of listed companies in the Athens Stock Exchange”. Journal of Financial Management and Analysis. Vol. 19. No. 1. pp. 26 – 35.

19 Nobanee, Haitham and Al Hajjar, Maryam. (July 13, 2009). “A Note on Working Capital Management and Corporate Profitability of Japanese Firms”. [Online] Available: http://ssrn.com/abstract=1433243

20 Moss, J., and Stine, B., (1993). "Cash Conversion Cycle and Firm Size: A Study of Retail Firms". Managerial Finance. Vol. 19. pp. 25-35.

21 Nobanee, Haitham., (September 10, 2009). “Working Capital Management and Firm's Profitability: An Optimal Cash Conversion Cycle”. [Online] Available: http://ssrn.com/abstract=1471230

22 Khan, M Y., Jain, P K. “Financial Management, Text and Problems”. Third Edition. Tata McGraw-Hill Publishing Company Limited, New Delhi. p.15.3.

23 Brigham, Eugene F., Gapenski, Louis C. (1997). “Financial Management, Theory and Practice”. 8th Edition. The Dryden Press. USA. p. 857.

24 Moss, J., and Stine, B., (1993). Op.cit.

25 Stewart, G., (1995). “Supply Chain Performance Benchmarking Study Reveals Keys to Supply Chain Excellence.” Logistics Information Management. Vol. 8 (2), 38-45.

26 Besley, S., and Brigham, E., (2005). “Essentials of Managerial Finance”. 13th Edition, Thomson.

27 Keown, A. J., Martin, J. D., Petty, J. W. and Scott, D. F., (2003). “Foundations of Finance”. 4th edition. Pearson Education, New Jersey. p. 109.

28 Vishnani, Sushma & Shah, Bhupesh Kr. (2007). Op.cit.

Chapter 2 Review of Literature


15

CHAPTER 2

REVIEW OF LITERATURE

“Capital Structure and Working Capital Management are two areas widely revisited by

academia in order to postulate firms’ profitability”.1 According to Smith, “the importance

of Working Capital Management lies in the fact that it has an adequate effect on the

Profitability and risk of a firm.”2 However, it seems that this aspect of Financial

Management is often overlooked by managers and even by researchers in the field of

Finance. In fact, managers seldom devote the due consideration to the short term

financial affairs of their companies. The long-term financial decisions, no doubt, are

much more crucial and imperative, but the impact of financial decisions to be made in the

short-run also can never be undervalued.

Though simpler in nature, short-term financial affairs and decisions play a central role in

a firm’s profit maximization and value creation.

An efficient management of working capital serves as the nucleus of short-term financial

matters of any profit-making entity.

There has been some work previously done on the relationship between Working Capital

Management and its influence on profitability of companies. Many researchers have

recognized the effect of a sensible management of working capital on corporate

performance. In the next few pages, some of the major articles written by different

authors in different environments and for different sectors of the business Industry with a

view to establishing a logical relationship between the variables of Working Capital

Management and that of the Profitability are summarized:

2.1 MARC DELOOF

“The way that working capital is managed has a significant impact on profitability of

firms”, says Marc Deloof in his article, “Does Working Capital Management Affect

Profitability of Belgian Firms?” written with a view to explicating the relationship



16

between Working Capital Management and Profitability for a sample of 1009 large

Belgian non-financial firms for the period 1992-1996.3 The sample was taken from a

Database of the National Bank of Belgium.

The management of working capital was measured by the Cash Conversion Cycle which

was calculated as (Number of days Accounts Receivable + Number of days Inventory -

Number of days Accounts Payable). For the purpose of measuring Profitability, two

variables were used; the Net Operating Income (Sales less Costs of Sales, including

Depreciation and Amortization) and the Gross Operating Income (Net Operating Income

plus Depreciation and Amortization). Both the figures were to be divided by the (Total

Assets - Financial Assets) figure so as to accurately measure the impact of operating

activities only on the Non-Financial Assets of firms involved in the study.

A few other variables were also included in the study that served as control variables in

the regression model. These were the Size of the company measured as the natural

logarithm of its Sales, the Sales Growth, the Financial Debt ratio and the ratio of Fixed

Financial Assets to Total Assets.

2.1.1 Findings of his Study

The Pearson Product-Moment Coefficient of Correlation used by Deloof indicated a

Negative correlation between the variables of Profitability and that of Working Capital

Management for the sample of Belgian firms. The results, he believed, matched with the

earlier views according to which shortening the receivable and inventory conversion

period could increase profitability. However, the fact that there was a negative

relationship between profitability and payables conversion period was explained by him

as “less profitable firms wait longer to pay their bills. In that case, profitability affects

accounts payable policy, and not vice versa.”4

In the Regression analysis, a total of 18 regressions were performed, 8 each for Gross

Operating Income and Net Operating Income. Fixed effects estimation models were used

in addition to the plain OLS-models that included variability of income, 4 year dummies

and 37 industry dummies based on 2-digit NACE-code.



17

The impact of WCM was calculated separately on Gross Operating Income and Net

Operating Income. For Gross Operating Income, the variables of WCM, i.e., number of

days accounts receivable, inventory and payable, and the cash conversion cycle showed a

negative relation in the first four regressions. The regressions for all except that for cash

conversion cycle were highly significant. The regressions also showed a significant

positive relation of Gross Operating Income with Firm Size, Sales Growth and Fixed

Financial Assets and a negative relation with Financial Debt.

The results of the first four regressions proposed that profitability could be increased by

shortening the receivable and inventory conversion periods.

The plain OLS was used in regressions (5) to (8) to calculate the effect of WCM on gross

operating income that included variability of income, 4 year dummies and 37 industry

dummies as independent variables. The results were supportive of those taken from

regressions (1) to (4). All the four variables of WCM demonstrated a highly significant

negative relation with Gross Operating Income.

In the remaining 8 regressions, i.e., regressions (9) to (16), the Net Operating Income was

taken as the dependent variable. The results of all these regressions exhibited a very week

relation of WCM with Net Operating Income by having considerably lower R² values as

compared to the regressions having Gross Operating Income as the dependent variable.

Deloof, thus, concluded his study by finding a strong negative relationship between the

variables of working capital management and that of profitability and suggested that

managers should do their utmost to reduce the number of days accounts receivable and

inventories to the optimal level so as to boost up profitability.

2.2 SUSHMA VISHNANI AND BHUPESH KR. SHAH

Sushma Vishnani and Bhupesh Kr. Shah, in their article, “Impact of Working Capital

Management Policies on Corporate Performance — An Empirical Study”, made a

pragmatic analysis of Indian Consumer Electronics Industry to determine the impact of

working capital policies & practices on profitability for the period 1994–95 to 2004–05.5

They used the coefficient of Correlation and Regression analysis for this purpose. The

CMIE database—Prowess was used for collection of the required data. A total of 23



18

listed Companies of the Indian Consumer Electronics Industry had been chosen by them

as a sample.

In their study, Sushma and Bhupesh measured the impact of Liquidity on Profitability

separately from the impact of Working Capital Management on Profitability. They used

the Return on Capital Employed (ROCE) as a variable for measuring Profitability and the

Current Ratio as the one for measuring the Liquidity. The Working Capital Management

(WCM) was assessed by the Net Working Capital Cycle (NWC).

Individual company Regression and Correlation analysis was also performed in their

study in addition to the Industry-wide analysis to find the impact of Liquidity and

Working Capital Management on Profitability.

2.2.1 Findings of their Study

“Conventionally, almost all the textbooks pertaining to Financial Management and

Working Capital Management, apparently stress on the inverse relationship between

liquidity and profitability”, reported Vishnani and Shah.6 They, however, came across the

opposite of it. In the Individual Company Correlation Analysis, majority of the

companies (14 out of 23) depicted a positive relationship between liquidity and

profitability. However, only 4 among them indicated a statistically significant

relationship at 5 percent.

The Industry-wide Correlation Analysis also showed a week and statistically insignificant

positive relationship between Liquidity and Profitability.

In the Individual Company Regression Analysis also, a positive relationship was found

between liquidity and profitability among 13 companies out of 23, although all, except

one, showed an insignificant relationship. However, the Industry-wide Regression

Analysis demonstrated a very week and insignificant relationship between the two

variables with a very low R2 value and extensively high p-value.

The same analyses were also executed to calculate the impact of Working Capital

Management on Profitability. The determinants of Working Capital Management, i.e., the

Inventory Holding Period, the Average Collection Period, the Average Payment Period

and the Net Working Capital Cycle were analyzed individually. In the Individual



19

Company Correlation Analysis, a Negative correlation was found between the

determinants of WCM and profitability in most of the companies. The same results were

confirmed by the Industry-wide Correlation analyses as well.

The Individual Company Regression Analysis for the WCM-Profitability relationship

depicted that majority of the companies were indicative of a negative relationship

between ROCE and the determinants of WCM with the exception of the Average

Payment Period which showed a positive relationship with profitability variable. The

Industry-wide Regression Analyses in WCM-Profitability relationship also led to almost

the same results.

In nutshell, the report failed to provide a definite, statistically significant relationship

between Liquidity and Profitability. But it did indicate a significant Negative relationship

between the Net Working Capital Cycle (or what is commonly referred to as the “Cash

Conversion Cycle”) and the Profitability.

2.3 PEDRO JUAN GARCÍA-TERUEL AND PEDRO

MARTÍNEZ-SOLANO

Most of the previous studies conducted with a view to finding out the relationship

between Working Capital Management (WCM) and Profitability have traditionally

focused on large profit-oriented organizations. Contrary to this, Pedro Juan García-Teruel

and Pedro Martínez-Solano were the first to make an experimental analysis about the

effects of WCM on the Profitability of Small and Medium Enterprises or SMEs. In their

article, “Effects of Working Capital Management on SME Profitability”, they took a

sample of 8,872 small and medium-sized Spanish firms for the period 1996-2002 for the

purpose of constructing an empirical relationship between WCM and profitability.7 The

data was collected from the AMADEUS database developed by Bureau van Dijk which

possesses financial data of European companies.

Return on Assets (ROA) was used as the dependent variable to measure the profitability

of SMEs included in the sample. The variable is defined as the ratio of Earnings before

Interest and Tax to Assets.



20

The independent variable, i.e., the Working Capital Management was calculated by Cash

Conversion Cycle, the most popular and probably the most appropriate variable for the

measurement of WCM. The Cash Conversion Cycle (CCC) was obtained by adding up

the number of days receivables and inventories, and then subtracting the number of days

payables from the sum. The number of days Receivables, Inventories, and Payables were

calculated as {365 × (Accounts Receivable/Sales)}, {365 × (Inventories/Purchases)}, and

{365 × (Accounts Payable/Purchases)} respectively.

In addition to these, a few control variables were also used in the study, which were; the

Size of the firm, the Growth in its sales, the Leverage and the Annual GDP Growth.


The correlation analyses displayed a very significant negative relationship between the

Return on Assets and the number of days accounts receivable, number of days inventory

and the number of days accounts payable. Also, the correlation between the cash

conversion cycle and the profitability variable was negative as well as statistically

significant. The authors, thus, held that shortening the (CCC) would lead to an increase in

profitability.

The authors also conducted a Univariate and Multivariate analysis in their valuable study.

In the Univariate analysis, they attempted to discover whether the most and least

profitable firms really had different levels of receivable, inventory and payable

conversion periods. For this very purpose, they divided their sample firms into four

quartiles based on their profitability with quartile (1) having the least profitable firms and

quartile (4) having the most profitable ones. The results showed a reasonable difference

in the values for the first and the fourth quartile. Thus for profitable firms, a shorter

receivable, inventory and payable conversion period was found compared to less

profitable firms. Also, such firms were larger in size, and had rapidly growing sales and a

lower leverage. But the change in the values form one quartile to the next was not

completely logical and/or orderly. This led them to the conclusion that the analysis was

not adequate enough for a better understanding of the effect of WCM on profitability.

The researchers went on to use Multivariate analysis by regressing ROA with the

variables of WCM. Once again, same results were drawn with profitability being



21

dwindled by amplifying the number of days receivable, inventory and payable, and that

of the cash conversion cycle. Moreover, profitability was also found to be positively and

significantly related with size of the firm and its sales growth.

The authors also addressed, most importantly and for the first time, the possible

endogeneity problems to ensure that the association between the two variables was to be

attributed to the impact of the factors of WCM on profitability and not the other way

round. To carry this confirmation test, instrumental variables were used while performing

regression analysis. The result verified the previous regression results with the exception

of the “number of days accounts payable” variable that showed the possible presence of

endogeneity problem. Hence, they were not sure whether the number of days accounts

payable was affecting profitability or was it the opposite situation, i.e., the vice versa…

The authors eventually came to the conclusion by quoting Peel & Wilson (1996) that

efficient management of working capital is specifically important for smaller companies.8

In the concluding lines they wrote, “Working capital management is particularly

important in the case of small and medium-sized companies. Most of these companies’

assets are in the form of current assets. Also, current liabilities are one of their main

sources of external finance.”9

2.4 DR IOANNIS LAZARIDIS AND MSC DIMITRIOS

TRYFONIDIS

The paper, “The relationship between working capital management and profitability of

listed companies in the Athens Stock Exchange” was intended to observe the connection

between corporate profitability and working capital management. Dr Ioannis Lazaridis

and MSc Dimitrios Tryfonidis, the authors of that article, took a sample of 131

companies listed in the Athens Stock Exchange (ASE) for the period of 2001-2004 with

the objective of formulating a statistically significant relationship between the index of

profitability and the components of cash conversion cycle.10 The data was obtained from

the ICAP SA database.



22

The variables used for assessing profitability and working capital management were the

same as used by most of the previous studies, i.e., the Gross Operating Profit for

Profitability and the Cash Conversion Cycle for Working Capital Management.

A few other independent variables such as fixed financial assets, the natural logarithm of

sales, and the financial debt ratio were also included in the study.


Both the correlation and regression analysis were performed for a better understanding of

the relationship between WCM and profitability. The results of the correlation analysis

demonstrated a highly significant negative relationship between gross operating profit

and number of days accounts receivable, payable and that of the cash conversion cycle.

According to the authors, “the negative relation between accounts payables and gross

profit indicate that more profitable firms delay their payment towards their suppliers-

creditors.”11 This statement was in contrast with that of Deloof’s argument that less

profitable firms would wait longer to make payment of their bills.

In the proceeding regression analysis, gross operating profit was regressed against six

exogenous variables and the industry dummy variables. Four regression analyses were

made each separately relating the gross operating profit with the components of WCM,

i.e., the number of days accounts receivable, number of days inventory, number of days

accounts payable, and the cash conversion cycle.

The first regression made to examine the relationship between the cash conversion cycle

and profitability showed a strong and significant negative association between the two.

The regression also showed a positive link between the size of the firm and its

profitability and a negative association of the same with the financial debt level. Fixed

financial assets, however, were found to be positively related to profitability.

The second, third and fourth regressions included, among other variables, the substitution

of the cash conversion cycle with the number of days accounts payable, number of days

accounts receivable and number of days inventory respectively. All the variables

displayed a negative relationship with the gross operating profit. However, the negative

relationship of the number of days inventory with the profitability variable was not found



23

to be statistically significant in contrast with the other components of the cash conversion

cycle.

The paper, nonetheless, contributed to the existing literature by confirming a negative

relationship between the cash conversion cycle of a firm and its operating profitability.

2.5 AZHAGAIAH RAMACHANDRAN AND

MURALIDHARAN JANAKIRAMAN

Another work undertaken with a view to examining the liaison between the management

of working capital and corporate profitability was that initiated by two Indian authors

Azhagaiah Ramachandran and Muralidharan Janakiraman. Their paper “The Relationship

between Working Capital Management Efficiency and EBIT” was intended to analyze the

Paper Industry in India for the period 1997–1998 to 2005–2006.12 The objective was two-

fold; to assess the efficiency of companies in Working Capital Management in India’s

Paper Industry, and to investigate the relationship between efficiency of WCM and EBIT

in the Paper Industry of India. Secondary sources of data were used with the required data

being collected from the CMIE prowess (package). 30 sample firms were chosen from a

total of 85 companies of Paper Industry listed in the Bombay Stock Exchange.

In the first portion of the analyses, they used three indexes for the measurement of WCM

Efficiency. These were the Performance Index (PI), the Utilization Index (UI) and the

Efficiency Index (EI).

The second part of their analyses constituted the measurement of Net EBIT, the Cash

Conversion Cycle and other variables, commonly known as the control variables.

Included in these were the Natural Logarithm of Sales, the Financial Debt ratio and the

Fixed Financial Assets ratio.


The first portion of their analyses depicted that the industry overall performed well in

manipulating various components of its Current Assets to generate more Sales since 15

out 30 sample firms were successful in the efficient utilization of Current Assets.

Similarly, the Efficiency Index (EI) was greater than one for 12 out of 30 companies



24

representing efficiency of the Indian Paper Industry in the management of working

capital. The performance of the Paper Industry was satisfactory and efficient during the

study period as 17 out 30 firms in the sample had a Performance Index greater than one.

The second and the most important portion of the analyses was the one concerned with

the relationship of WCM efficiency and EBIT. The results of the Regression showed a

significant negative relationship of EBIT with Cash Conversion Cycle. Fixed Financial

Assets and Financial Debt ratio were also negatively related and Sales Natural Log was

positively related with the profitability index and the associations were highly significant.

The Regression, however, had some striking findings as well. Contrary to most, if not all,

of the studies, it showed a significantly positive association of EBIT with both the

number of days accounts receivable and the number of days accounts payable variable.

However, the association of EBIT with the number of days inventory was negative, but

that too an insignificant one. To conclude anyhow, the authors observed that EBIT was

significantly related with WCM Efficiency in the Paper Industry of India.

2.6 M. A., ZARIYAWATI, M. N., ANNUAR AND A.S.,

ABDUL RAHIM

Another attempt to investigate the relationship between corporate profitability and

working capital management was that made by Malaysian authors, M. A., Zariyawati, M.

N., Annuar and A.S., Abdul Rahim. Their article “Effect of Working Capital

Management on Profitability of Firms in Malaysia” was intended to discover the

association of the two variables in six different Economic Sectors of the Malaysian

Industry. The justification they had to conduct the study was that most of the previous

studies, in their opinion, focused on large and/or developed markets. Thus reinvestigating

the issue in the emerging markets of Malaysia could provide further insight on the impact

of working capital management on profitability. 13

The required data was collected from the DataStream Database that consists of financial

statements of firms listed in Bursa Malaysia. A total of 148 firms were selected with

1628 firm-year observations over a period of 11 years ranging from 1996 to 2006. The

sample contained firms from six separate Economic Sectors of the Country.



25

The Operating Income (OI) was used as a measure for assessing profitability of firms in

the study. Mathematically, the Operating Income was defined as (Operating Income +

Depreciation)/Total Assets. For the measurement of working capital management,

however, the Cash Conversion Cycle was incorporated. Control variables such as the

Sales Growth, the Debt Ratio and the Current Ratio were also included in the study.


The Spearman’s Correlation analysis found a negative relationship between the Cash

Conversion Cycle and the profitability index OI. The Debt Ratio also had a negative

relationship with the OI. However, the Current Ratio and the Sales Growth were

positively related.

The following Regression analyses also verified the results drawn from the Correlation.

A highly significant negative relationship was observed between CCC and OI. The

association of Current Assets with OI was positive once again, but not significant at all.

The authors also performed a unique Sector-wise analysis of the Malaysian industry

including firms from six various Sectors of the Country. The results were interesting. A

significantly negative association was found between CCC and OI in all the sectors

except the Industrial Product sector. In the same manner, none, but the Plantation sector,

showed a significantly negative relationship between the Current Assets and OI.

A highly significant negative relation was observed between the Financial Debt Ratio and

the profitability index. However, the regression reported that none of the sectors under

study demonstrated a significant positive association between Sales Growth and the

Operating Income.

The authors concluded their paper by suggesting that firm managers should strictly focus

on shortening their Cash Conversion Cycle in order to maximize Shareholder Wealth.

2.7 ABDUL REHMAN AND MOHAMED NASR

One of the very few efforts made in Pakistan with the aim to assess the impact of

Working Capital Management on Profitability was that initiated by Abdul Rehman and

Mohamed Nasr, the former being a PhD student at COMSATS Institute of Information



26

Technology, Islamabad, and the later serving as a Professor at the same Institute. In their

article “Working Capital Management and Profitability – Case of Pakistani Firms”

published in the International Review of Business Research Papers, they took a sample of

94 Pakistani firms listed in the Karachi Stock Exchange for the period 1999-2004 with

the objective of establishing a relationship between WCM and profitability of firms in

Pakistan. Some of the other objectives of the study were; to relate Profitability with

Liquidity in Pakistani firms, to establish a relationship between Profitability and Size of

the firms in Pakistan, and to trace the association between the Financial Debt and

Profitability in the country. 14

The Net Operating Profitability (NOP) was used as a gauge for measuring Profitability.

Defined as “Operating Income plus Depreciation, divided by Total Assets minus

Financial Assets”, it served as the dependent variable. For the measurement of Working

Capital Management, the Cash Conversion Cycle was used. The Current Ratio was used

to measure the level of Liquidity. In addition, the Debt Ratio, the Size of the firm

(measured as the Natural Logarithm of Sales), and the Financial Assets to Total Assets

Ratio were also used to serve as control variables.


The authors used Pearson Correlation Coefficient, Pooled Ordinary Least Squares

Regression and Generalized Least Squares Regression (Cross Section Weights) to

analyze the data. Results of the Correlation analysis showed a highly significant negative

relationship between Profitability and the variables for Working Capital Management,

i.e., the number of days accounts receivable, the number of days accounts payable, the

number of days inventory, and the Cash Conversion Cycle. The Current Ratio had a

significant negative relationship with Profitability and a positive and significant

association was observed between the Size of a firm and it’s Profitability. The ratio of

Financial Assets-to-Total Assets also was negatively associated with Profitability.

Both the Regression models used in the study generated exactly the same results as were

given by the Correlation analysis.

The authors concluded that the management of working capital has a significant impact

on Profitability. They found a strong negative relationship between Liquidity and



27

Profitability and therefore assumed that Liquidity and Profitability run in reverse course.

They also observed that Profitability in Pakistani firms increases with Size of the entity.

Finally, they came to the conclusion that the more the debt financing used by a firm, the

less will be its profitability.

2.8 HAITHAM NOBANEE AND MARYAM ALHAJJAR

Another attempt to explore the relationship between the variables of Working Capital

Management and Profitability was made by Haitham Nobanee and Maryam AlHajjar in

their research paper “A Note on Working Capital Management and Corporate

Profitability of Japanese Firms”. Their analysis was based on a sample containing 2123

Japanese non-financial firms listed in the Tokyo Stock Exchange for the period from

1990 to 2004. The data was obtained from the World Scope. 15

Like most of the articles previously written on the same subject, the authors used the

Cash Conversion Cycle as a yardstick for Working Capital Management. To measure the

Profitability, however, the Return on Investment variable was incorporated.


A Non-parametric Correlation (Spearman) was used in addition to the Regression

analysis to analyze the gathered data. A yearly breakdown of the analyses also was made

to find the impact of the variables of working capital management on Return on

Investment for each year separately. The authors found in the descriptive portion of their

analysis that the average Cash Conversion Cycle of Japanese firms during the whole

period was 76.71 days, noticeably shorter than the average Cash Conversion Cycles of

the American firms (approx. 116 days) and European firms (approx. 263 days).

In the Quantitative analysis, both the Spearman Correlation and the Regression analysis

resulted in the same findings, and hence only the Regression results were reported. The

researchers found a highly significant negative relation of Cash Conversion Cycle and

Return on Investment for every year of the study. Similarly, the relationship of Return on

Investment with the Receivable and Inventory Conversion periods also was significantly

negative on the whole and for most of the years. The Regression results, however,

showed a significant positive relationship (in contrast with most of the previously



28

executed studies) between the profitability variable and Payable Deferral Period for the

years 1990-1997, although a negative relation was also found between the two for the

years 2002-2003 and for the full period of analysis.

The authors concluded their study by suggesting that Japanese firms should focus on

shortening their Receivable Collection Period, Inventory Conversion Period and Cash

Conversion Cycle to enhance profitability. Lengthening the Payable Deferral Period

could also add to profitability, they argued. However, they deemed the over lengthening

of the Payable Deferral Period to be equally risky as it could harm the firm’s credibility

and credit reputation in the long run.

2.9 DR. S. BENJAMIN CHRISTOPHER AND MS. A. L.

KAMALAVALLI

An efficient Working Capital Management plays a crucial role in the triumph of not

merely the Manufacturing concerns but also of the Service-oriented organizations. With

this assumption in mind, Dr. S. Benjamin Christopher and Ms. A. L. Kamalavalli came

forward to investigate about influence of the management of working capital on the

profitability of Indian Corporate Hospitals. In their article “Sensitivity of Profitability to

Working Capital Management in Indian Corporate Hospitals”, they took a sample of 14

out of the fifty one listed corporate hospitals in India using panel data analysis for the

period 1996-97 to 2005-06. The data was collected from PROWESS of the Center for

Monitoring Indian Economy (CMIE) and CAPITA LINE PLUS of the Bombay Stock

Exchange. Apart from determining the impact of WCM on profitability, the other

objective of the study was to find out the WCM variable that had the most prominent

impact on profitability. 16

A total of 13 independent variables (WCM variables also included) were used in the

study, each being separately associated with the Profitability index. These variables were

the Current Ratio, the Quick Ratio, the Debtor’s Turnover Ratio, the Inventory Turnovetr

Ratio, the Cash Turnover Ratio, the Working Capital Turnover Ratio, the Ratio of

Current Assets to Total Assets, the Ratio of Current Assets to Operating Income, the Net

Liquid Balance, the Comprehensive Liquidity Index, the Size of the firm, the Financial



29

Leverage and the Growth in sales. The dependent variable used for measuring

Profitability was the Return on Investment (ROI) ratio. Both the Regression and

Correlation models were used to analyze the data.


The Correlation analysis predicted a mix of positive and negative associations of the

autonomous variables with Profitability. The variables that showed a positive relationship

with the Return on Investment were the Debtor’s Turnover ratio, Inventory Turnover

ratio, Working Capital Turnover ratio, Current Assets to Total Assets ratio, Net Liquid

balance, Comprehensive Liquidity Index, Growth rate and Size of the firm. And those

displaying a negative association were Current ratio, Quick ratio, Leverage, Current

Assets to Operating Income and Cash Turnover ratio. However, only nine out of the

thirteen variables had a significant link with profitability. Moreover, the Current ratio was

found to have the most prominent impact on Profitability, although from the research it

was also found that the Current ratio had the least direct effect on Profitability while the

Quick ratio had the highest direct effect.

In order to maximize Profitability, the authors suggested that Indian hospitals should

maintain an optimum level of Current Assets. “They should follow the policy of low

liquidity with high profitability”, they deemed.17 They also suggested Indian hospitals to

increase their Inventory Turnover ratio, Debtors Turnover ratio and Working Capital

Turnover to increase their Profitability since these variables were positively related with

the Return on Investment. Hence, it can be held that the study gave another evidence of

the importance of shortening of the Receivable and Inventory Conversion periods to

enhance Profitability.

2.10 HAITHAM NOBANEE

The literature available on the influence of Working Capital Management on a firm’s

Profitability conventionally stresses on the need to shorten the Cash Conversion Cycle so

as to boost Profitability. Haitham Nobanee, however, looks at it the other way. In his

opinion, shortening of a firm’s Cash Conversion Cycle might also spoil its Profitability.

This could be the result when, in an attempt to shorten the Inventory Conversion Period,



30

the firm experiences a shortage of Inventory; or when a firm decreases its Receivable

Collection Period and, as a result, loses some or many of its valuable clients; and finally,

when a firm lengthens its Payable Deferral Period to have more cash available for other

activities but ends up damaging its credit reputation. With this theoretical framework in

mind, Nobanee introduced the notions of Optimal Inventory Conversion Period, Optimal

Receivable Collection Period and Optimal Payable Deferral Period ---- the length of

Inventory, Receivable and Payable Conversion periods where the Carrying costs as well

as the Opportunity costs of holding Inventory, Receivables and Payables are minimized

in order to minimize the total costs. Recalculating the Cash Conversion Cycle with these

optimal values, the firm would come up with an Optimal Cash Conversion Cycle which,

he thought, could provide the best estimation of the efficiency of Working Capital

Management in boosting Profitability.18

Thus the term Optimal Cash Conversion Cycle was defined as the optimal length of the

Inventory Conversion Period plus the optimal length of the Receivable Collection Period

minus the optimal length of the Payable Deferral Period.

In his article “Working Capital Management and Firm's Profitability: An Optimal Cash

Conversion Cycle”, he endeavored to calculate the Optimal Cash Conversion Cycle of a

sample of US non-financial firms and link its possible impact with their Profitability. The

data was obtained from the Datastream and World Scope containing financial statements

from 1990 to 2004 of 5802 companies listed in the New York Stock Exchange (NYSE),

the American Stock Exchange (ASE), NASDAQ Stock Market and the Over-the-Counter

Market.

The relationship between liquidity and profitability was measured by the Quick Ratio.

The Sales Growth and the Debt-to-Equity Ratio were also used as control variables.

Profitability of firms was measured by their Operating Income to Sales Ratio.

2.10.1 Findings of his Study

The Generalized Method of Moment System Estimation (GMM) was applied to the panel

data in order to investigate the relationship between the variables. The estimated

coefficients showed some very different results from those obtained in the previous

studies. The regression displayed a highly significant positive association of the Optimal



31

Cash Conversion Cycle, Optimal Inventory Conversion Period and Receivable Collection

Period with that of the profitability variable. The Optimal Payable Deferral Period, on the

other hand, had a significant negative relationship with the companies’ performance. The

results, however, verified the traditional trade-off between Liquidity and Profitability by

demonstrating a significant negative relationship between the Quick Ratio and Operating

Income to Sales Ratio. Sales Growth was found to be positively related with Profitability

and no significant connection was found between the Debt-to-Equity Ratio and

companies’ performance. The author, consequently, suggested the Optimal Cash

Conversion Cycle as the more accurate and comprehensive measure of Working Capital

Management.

2.11 HAITHAM NOBANEE AND MARYAM

ALHAJJAR 2

Another article written by the same authors on the effect of Working Capital

Management on Profitability was named as “Working Capital Management, Operating

Cash Flow and Corporate Performance”. The paper was intended to investigate the

interrelationship between Working Capital Management, Corporate Performance and

Operating Cash Flow. This relationship was examined for a sample of 5802 US non-

financial firms listed in the New York Stock Exchange (NYSE), American Stock

Exchange (ASE), NASDAQ Stock Market and the Over-the-Counter Market for the

period 1990-2004. The data was accessed from the Datastream and World Scope. 19

Cash Conversion Cycle was incorporated to symbolize Working Capital Management. To

evaluate companies’ performance, two separate profitability ratios were used; the

Operating Income to Sales ratio and the Operating Cash Flows to Sales ratio. The effect

of WCM was separately analyzed using the two profitability ratios.

The Generalized Method of Moment System Estimation (GMM) was applied to the panel

data to investigate the association between the variables.


The first regression results showing the relation between the Cash Conversion Cycle and

the Operating Income to Sales ratio illustrated that lengthening the Cash Conversion



32

Cycle, Receivable Collection Period and Payable Deferral Period had a significant

negative impact on the companies’ performance. However, the Inventory Conversion

Period had strong positive impact on Profitability. This finding was contrary to all the

previous literature on the same subject. The second regression results demonstrating the

association between the WCM variable and the Operating Cash Flows ratio also depicted

exactly the same relationships between the dependent and the independent variables as

were identified by the first regression. The authors, nevertheless, attributed the positive

correlation between the Inventory Conversion Period and corporate profitability to the

possible Inventory Shortage costs in an attempt to shorten the number of days inventory.

2.12 OTHER RELATED PAPERS

The influence of Working Capital Management and Liquidity on corporate performance

has been acknowledged by many other researchers as well. The ensuing lines enclose

some of the research findings of the other previously done work on this and the related

topics:

Shin and Soenen (1998) were probably among the pioneers to relate efficient

management of working capital with enhanced profitability. In their article “Efficiency of

Working Capital Management and Corporate Profitability”, they analyzed whether the

Cash Conversion Cycle (they used the Net Trade Cycle variable in which number of days

inventory, receivables, and payables were all divided by the Sales figure and then

multiplied by 365) had some potential impact on the profitability of a sample of firms

listed on the US Stock Exchange during the period 1974-1994. They found that a

reasonable reduction in the Cash Conversion Cycle could lead to an increase in the firms’

Profitability.20

Amit K. Mallik, Debashish Sur and Debdas Rakshit (2005) took a sample from the Indian

Pharmaceutical Industry to examine the relationship between working capital

management and profitability but failed to establish any.21 Dr D. Mukhopadhyay (2004)

indicated, in his article “Working Capital Management in Heavy Engineering Firms—A

Case Study”, that no significant role did current assets play in the profit maximization of

the firms under study.22 A study with a view to analyzing the relationship between

working capital management efficiency and corporate profitability in the Indian Cement



33

Industry was conducted by Dr Santanu Kr. Ghosh and Santi Gopal Maji (2003). His

results depicted a significant association between effective and efficient use of current

assets and profitability. However, the study also revealed that the performance of the

industry was not remarkable during that period.23 D. Sur, J. Biswas and P. Ganguly

(2001) found a very strong positive link between liquidity and profitability in the Indian

Aluminum Producing Industry.24 D. Govind Rao and P. M. Rao (1999) researched the

relationship of WCM and profitability in Indian cement industry and found a mix of

positive and negative connections between the working capital related variables and that

of profitability.25 A. Vijaykumar and A. Venkatachalam (1995) explored a negative

correlation between liquidity and profitability in the Tamil Nadu Sugar Industry.26 On the

other hand, Bardia (2004) discovered a positive relationship between liquidity and

profitability in the steel giant SAIL for the period 1992-2002.27 Narware (2004),

however, found both positive and negative interrelationship between working capital

management and profitability in a fertilizer company, NFL.28

The relationship between liquidity and profitability was also inspected by Eljelly in 2004

using a sample of Saudi Arabian companies. His results narrated that the Cash

Conversion Cycle was more suitable to be used as a measure for assessing a company’s

liquidity rather than the more static Current Ratio. The results also showed a strong

negative relationship between liquidity and profitability. The size of the company was

found to have a profound impact on its profitability in the analysis made by Eljelly.29

The size of a firm was also known to have a substantial impact on its Cash Conversion

Cycle. “Smaller firms have longer CCC”, noticed Ali Uyar who endeavored to determine

the association of CCC with the size and profitability of Turkish firms listed on the

Istanbul Stock Exchange. In his work “The Relationship of Cash Conversion Cycle with

Firm Size and Profitability: An Empirical Investigation in Turkey”, he found a strong and

significant negative linkage of Cash Conversion Cycle with the firm size as well as with

its performance.30

(Lyroudi & Lazaridis, 2000) made a unique study of the Greek Food Industry to

determine the relationship between the Cash Conversion Cycle and the traditional

liquidity indicators, i.e., the Current Ratio and the Quick Ratio. The results portrayed a



34

significant positive association between the modern and traditional liquidity signifiers.

The Cash Conversion Cycle was also found to be positively linked with the Return on

Assets ratio.31

Manoj Anand and Keshav Malhotra (2007) also attempted to significantly relate the

management of working capital with firm profitability in their article “Working Capital

Performance of Corporate India: An Empirical Study”. They used the data of 339 S&P

CNX 500 non-financial corporations for a period of 3 years from 2001-02 to 2003-04.

Their work, however, indicated a slight positive association between the management of

working capital and corporate profitability.32

The relationship of Working Capital Management and Profitability was also examined by

Chakraborty (2008) in Indian Pharmaceutical companies. He took a sample of 25 selected

firms in the industry for the period 1996-97 to 2007-08 in his article “Working Capital

and Profitability: An Empirical Analysis of Their Relationship with Reference to Selected

Companies in the Indian Pharmaceutical Industry”. He observed that there were two

different view points: One was that there might exist a negative relationship between

working capital and profitability and that the former does not play any role in improving

the later. The second view was that Working Capital Management had a notable impact

on Profitability and that without investment in working capital, the desired level of Sales

could not be achieved.33

Singh (2008) observed that the level of Inventory had a profound influence on the

management of working capital. He stressed on the need to prudently handle the

Inventory.34

J. P. Singh and Shishir Pandey Jr. (2008), in their article “Impact of Working Capital

Management in the Profitability of Hindalco Industries Limited” observed a significant

effect of the management of working capital on the profitability of Hindalco Industries.35

The impact of working capital management on profitability was also observed by Cote

and Latham (1999) who discovered that management of inventory, receivables and

payables had a direct influence on a company’s Cash Flows which could ultimately affect

its profitability.36



35

END NOTES

1 Lazaridis, Ioannis & Tryfonidis, Dimitrios., (January-June 2006). “The relationship between working capital management and profitability of listed companies in the Athens Stock Exchange”. Journal of Financial Management and Analysis. Vol. 19. No. 1. pp. 26 – 35.

2 Smith K. (1980). “Profitability versus Liquidity Tradeoffs in Working Capital Management: Readings on the Management of Working Capital”. Ed. K. V. Smith, St. Paul, West Publishing Company, pp. 549-562.

3 Deloof, Marc. (2003). “Does Working Capital Management Affect Profitability of Belgian Firms?” Journal of Business, Finance and Accounting. Vol. 30. pp. 573-88.

4 Ibid.

5 Vishnani, Sushma & Shah, Bhupesh Kr. (2007). “Impact of Working Capital Management Policies on Corporate Performance--- An Empirical Study”. Global Business Review. Vol. 8. p. 267. [Online] Available: http://gbr.sagepub.com/cgi/content/abstract/8/2/267

6 Ibid.

7 García-Teruel. Pedro Juan, Martínez-Solano, Pedro. (2007). “Effects of Working Capital Management on SME Profitability”. International Journal of Managerial Finance. Vol. 3, Issue 2. pp. 164-177.

8 Peel, M. and Wilson, N. (1996). “Working Capital and Financial Management Practices in the Small Firm Sector”. International Small Business Journal. 14 (2), pp. 52-68.

9 García-Teruel. Pedro Juan, Martínez-Solano, Pedro. (2007). Op.cit.

10 Lazaridis, Ioannis & Tryfonidis, Dimitrios., (January-June 2006). Op.cit.

11 Lazaridis, Ioannis & Tryfonidis, Dimitrios., Op.cit.

12 Ramachandran, Azhagaiah & Janakiraman, Muralidharan., (2009). "The Relationship between Working Capital Management Efficiency and EBIT". Managing Global Transitions. University of Primorska, Faculty of Management Koper. Vol. 7. Issue. 1, pp. 61-74.

13 Zariyawati, M. A., Annuar, M. N. & Rahim, A.S. Abdul., “Effect of Working Capital Management on Profitability of Firms in Malaysia”. Univeristi Putra Malaysia, Malaysia. [Online] Available: http://www.docstoc.com/docs/18167286

14 Rehman, Abdul & Nasr, Mohamed., (March 2007). “Working Capital Management and Profitability – Case of Pakistani Firms”. International Review of Business Research Papers. Vol. 3. No.1. pp.279 – 300.


16 Christopher, S. Benjamin and Kamalavalli, A. L., (January, 22 2009). “Sensitivity of Profitability to Working Capital Management in Indian Corporate Hospitals”. [Online] Available: http://ssrn.com/abstract=1331500

17 Ibid.



36


19 Nobanee, Haitham and Al Hajjar, Maryam. (September 10, 2009). “Working Capital Management, Operating Cash Flow and Corporate Performance”. [Online] Available: http://ssrn.com/abstract=1471236

20 Shin, H.H and Soenen, L. (1998). “Efficiency of Working Capital Management and Corporate Profitability”. Financial Practice and Education. Vol. 8 No. 2. pp 37-45.

21 Amit, K. Mallik, Sur, Debashish and Rakshit, Debdas. (2005). “Working Capital and Profitability: A Study on their Relationship with Reference to Selected Companies in Indian Pharmaceutical Industry”. GITAM Journal of Management. Vol. 3: pp. 51–62.

22 Mukhopadhyay, D. (2004). “Working Capital Management in Heavy Engineering Firms—A Case Study”. [Online] Available: myicwai.com/knowledgebank/ fm48.

23 Ghosh, S.K. and Maji, S.G. (May, 2004). “Working Capital Management Efficiency: A Study on the Indian Cement Industry”. The Management Accountant. pp. 363–72.

24 Sur, D., Biswas J. and Ganguly P. (June, 2001). “Liquidity Management in Indian Private Sector Enterprises: A Case Study of Indian Primary Aluminium Producing Industry”. Indian Journal of Accounting. pp. 8–14.

25 Govind Rao, D. and Rao, P.M. (1999). “Impact of Working Capital on Profitability in Cement Industry—A Correlation Analysis”. Deep & Deep Publications Pvt. Ltd., New Delhi. pp. 239–59.

26 Vijaykumar, A. and Venkatachalam, A. (June, 1995). “Working Capital and Profitability—An Empirical Analysis”. The Management Accountant. ICWAI, Kolkata. pp. 748–50.

27 Bardia, S.C. (June, 2004). “Liquidity Management: A Case Study of Steel Authority of India Ltd.”. The Management Accountant. ICWAI, Kolkata. pp. 463–67.

28 Narware, P. C . (2004). “Working Capital and Profitability– An Empirical Analysis”. The Management Accountant. ICWAI, Kolkata.

29 Eljelly, A. (2004). “Liquidity-Profitability Tradeoff: An Empirical Investigation in an Emerging Market”. International Journal of Commerce & Management. Vol. 14. No. 2. pp. 48 – 61.

30 Uyar, Ali., (2009). “The Relationship of Cash Conversion Cycle with Firm Size and Profitability: An Empirical Investigation in Turkey”. International Research Journal of Finance and Economics. ISSN 1450-2887. Issue 24. EuroJournals Publishing, Inc. pp. 186-193.

31 Lyroudi, K., & Lazaridis, Y. (2000). “The Cash Conversion Cycle and Liquidity Analysis of the Food Industry in Greece”. [Online] Available: http://ssrn.com/paper=236175.

32 Anand, Manoj and Malhotra, Keshav., (January 2007). “Working Capital Performance of Corporate India: An Empirical Study”. ICFAI Journal of Applied Finance. Vol. 13, No. 1, pp. 46-81.

33 Chakraborty, Kaushik., (December 2008). “Working Capital and Profitability: An Empirical Analysis of their Relationship with Reference to Selected Companies in the Indian Pharmaceutical Industry”. The ICFAI Journal of Management Research. Vol. 7, No. 12, pp. 41-59.



37

34 Singh, P. (2008). “Inventory and Working Capital Management: An Empirical Analysis”. The ICFAI University Journal of Accounting Research.

35 Singh , J. P. and Pandey, Shishir., (December 2008). “Impact of Working Capital Management in the Profitability of Hindalco Industries Limited”. The ICFAI University Journal of Financial Economics. Vol. 6, No. 4, pp. 62-72.

36 Cote J. M. and Latham C. K. (1999). “The Merchandising Ratio: A Comprehensive Measure of Working Capital Strategy”. Issues in Accounting Education. Vol. 14, Issue 2, pp. 255-267.

Chapter 3 The Research Methodology


38

CHAPTER 3

THE RESEARCH METHODOLOGY

3.1 COLLECTION OF THE DATA

In this dissertation, the relationship between Corporate Profitability and Working Capital

Management is investigated for small firms and large companies listed at Karachi Stock

Exchange for a period of six years from 2003 to 2008.

The data for this purpose was acquired from an official and legitimate document titled,

“Balance Sheet Analysis of Joint Stock Companies Listed on the Karachi Stock Exchange

--- (2003-2008)”, formally published by the Statistics and DWH Department of the State

Bank of Pakistan (SBP). This document contained the Balance Sheet analysis of all the

non-financial firms listed on the Karachi Stock Exchange as at June 30, 2008. Hence the

research was entirely based on the Secondary data. Firms of various economic groups

and sectors were included in the document including Cotton and Other Textiles,

Chemicals, Engineering, Sugar and Allied Industries, Paper & Board, Cement, Fuel &

Energy, Transport & Communication, Tobacco, Jute, Vanaspati & Allied Sector and

others. It should be mentioned that the financial corporations like Banking Companies,

Insurance Companies, Leasing Companies and Modarabas etc. were not included in this

study due to their distinctively dissimilar nature of business in comparison with the non-

financial business entities.

There were a total of 436 non-financial companies listed on the Karachi Stock Exchange

as at June, 2008 as per the analysis published by the State Bank of Pakistan. Out of these,

93 were found to be small or medium-sized companies as per the SBP’s SME Prudential

Regulations and the remaining were large corporations.



39

3.2 THE SAMPLES

There were two distinct samples used in the study --- sample 1 for small and medium

firms listed in Karachi Stock Exchange and sample 2 to represent the large companies

listed at KSE:

TABLE 3.1: Population and Samples

Total Sample

Size

Sample as a

Percentage of

Population

Small Non-financial

Corporations Listed in KSE

93 40 43%

Large Non-financial

Corporations Listed in KSE

343 103 30%

Non-financial Corporations

Listed in KSE

436 143 33%

3.2.1 Sample 1 --- For SMEs Listed in KSE

The sample used for representing small and medium enterprises listed in KSE was termed

as the Sample 1. The size of the sample 1 was unfortunately dependent on the availability

of complete financial data of SME’s in the source document published by SBP. As

mentioned earlier, there were a total of 93 small and medium-sized non-financial firms

listed in KSE. However, only 40 out of them had complete set of data required for the

study, i.e., the data for each year from 2003 to 2008.

Hence, analyses of all the 40 firms (having thorough six year financial data) were made

for six years ranging from 2003 to 2008 that led to a total of 240 firm-year observations.

It was ensured that each firm included in the sample 1 met the criteria of being

characterized as an “SME”. However, in order to have an ample number of firms for

obtaining significant and noteworthy findings, a few firms that had annual gross sales

slightly exceeding Rs. 300 million for just one year (or two years as can be noticed in just

one case) during the course of study were also included in the research.



40

The most widely accepted definition of an SME characterizes it as any business entity

(sole proprietorship, partnership, private limited company or even a public limited

company) having fewer than 250 employees. For the conduction of this research study,

however, the SME definition of the State Bank of Pakistan was followed for selecting

Sample SME’s listed at the Karachi Stock Exchange.

(The State Bank of Pakistan, in its SME Prudential Regulations, describes a

manufacturing SME as an entity not employing more than 250 persons with net sales not

exceeding Rs. 300 million as per latest financial statements.1)

The list of SME’s included in Sample 1 follows:

1. Aruj Garment Accessories Ltd. 2. International Knitwear Ltd. 3. Mubarak Textile Mills Ltd. 4. Mukhtar Textile Mills Ltd. 5. Regent Textile Industries Ltd. 6. Safa Textiles Ltd. 7. Amin Spinning Mills Ltd. 8. Mehr Dastagir Textile Mills Ltd. 9. Bannu Woolen Mills Ltd. 10. Kashmir Polytex Ltd. 11. Moonlite (Pak) Ltd. 12. Bawany Air Products Ltd. 13. Data Agro Ltd. 14. Leiner Pak Gelatine Ltd. 15. Sardar Chemical Industries Ltd. 16. Bela Automotives Ltd. 17. Johnson & Philips (Pakistan) Ltd. 18. The Climax Engineering

Company Ltd. 19. Transmission Engineering

Industries Ltd. 20. Dadabhoy Sack Ltd.

21. Pakistan Paper Products Ltd. 22. Ideal Energy Ltd. 23. S.G. Power Ltd. 24. Khyber Tobacco Company Ltd. 25. Sarhad Cigarette Industries Ltd. 26. Amin Fabrics Ltd. 27. Suhail Jute Mills Ltd. 28. Kakakhel Pakistan Ltd. 29. Al-Khair Gadoon Ltd. 30. Diamond Industries Ltd. 31. Goodluck Industries Ltd. 32. Grays Of Cambridge (Pakistan)

Ltd. 33. Haji Dossa Ltd. 34. Hashimi Can Company Ltd. 35. Indus Fruit Products Ltd. 36. Leather Up Ltd. 37. Mandviwala Mauser Plastic

Industries Ltd. 38. Pakistan House International Ltd. 39. Quice Food Industries Ltd. 40. Syed Match Company Ltd.

3.2.2 Sample 2 --- For Large Companies Listed in KSE

The sample containing large companies listed in Karachi Stock Exchange was labeled as

the “Sample 2”. As for this sample, 30% of all the large non-financial firms listed in KSE

were figured out. However, in order to select the largest firms listed in KSE for the

sample, all the listed firms were rolled in a descending order based on their average



41

annual gross sales amount and the top 30% firms that were the largest of all were

included in Sample 2.

The reason for selecting the largest companies in sample 2 was to expand as much as

possible the size gap between the firms of the two samples so as to get more perceptible

and meaningful results, or, in other words, to be able to study the change in the impact of

Working Capital Management on Profitability that could result due to a change in the

Size of the firms based on the Sales Volume.

There were a total of 343 large non-financial firms listed in KSE as at June, 2008.

Sample 2 included thirty percent of 343 firms or 103 firms for analysis. Hence, an

aggregate of 618 firm-year observations was made with observations of each firm for six

years ranging from the year 2003 to 2008.

A list of firms included in Sample 2 that represents large complex organizations listed in

Karachi Stock Exchange is given below:

1. Azgard Nine Ltd. 2. Colony Textile Mills Ltd. 3. Dewan Textile Mills Ltd. 4. Faisal Spinning Mills Ltd. 5. Fateh Textile Mills Ltd. 6. Fatima Enterprises Ltd. 7. Fazal Cloth Mills Ltd. 8. Gadoon Textile Mills Ltd. 9. Gul Ahmed Textile Mills Ltd. 10. Gulistan Textile Mills Ltd. 11. Indus Dyeing & Manufacturing

Co. Ltd. 12. Kohinoor Textile Mills Ltd. 13. Mahmood Textile Mills Ltd. 14. Masood Textile Mills Ltd. 15. Nishat (Chunian) Ltd. 16. Nishat Mills Ltd. 17. Quetta Textile Mills Ltd. 18. Reliance Weaving Mills Ltd. 19. Saif Textile Mills Ltd. 20. Sapphire Fibres Ltd. 21. Sapphire Textile Mills Ltd. 22. Suraj Cotton Mills Ltd. 23. The Crescent Textile Mills Ltd. 24. Al-Abid Silk Mills Ltd. 25. Dewan Salman Fibre Ltd.

26. Gatron (Industries) Ltd. 27. Ibrahim Fibres Ltd. 28. Liberty Mills Ltd. 29. Rupali Polyester Ltd. 30. Abbott Laboratories (Pakistan)

Ltd. 31. Berger Paints Pakistan Ltd. 32. Clariant Pakistan Ltd. 33. Colgate-Palmolive (Pakistan) Ltd. 34. Dawood Hercules Chemicals Ltd. 35. Engro Chemical Pakistan Ltd. 36. Fauji Fertilizer Bin Qasim Ltd 37. Fauji Fertilizer Company Ltd. 38. Glaxosmithkline (Pakistan) Ltd. 39. ICI Pakistan Ltd. 40. Pakistan PTA Ltd. 41. Sanofi Aventis (Aventis Pharma) 42. Searle Pakistan Ltd. 43. Sitara Chemical Industries Ltd. 44. Al-Ghazi Tractors Ltd. 45. Atlas Honda Ltd. 46. Crescent Steel & Allied Products

Ltd. 47. Dewan Farooque Motors Ltd. 48. General Tyre & Rubber Co. Ltd. 49. Ghandhara Nissan Ltd.



42

50. Hinopak Motors Ltd. 51. Honda Atlas Cars (Pakistan) Ltd. 52. Indus Motor Company Ltd. 53. International Industries Ltd. 54. Millat Tractors Ltd. 55. Pak Elektron Ltd. 56. Pak Suzuki Motor Company Ltd. 57. Pakistan Cables Ltd. 58. Siemens (Pakistan) Engineering

Co. Ltd. 59. Dewan Sugar Mills Ltd. 60. Habib Sugar Mills Ltd. 61. JDW Sugar Mills Ltd. 62. Shakarganj Mills Ltd. 63. Century Paper & Board Mills Ltd. 64. Packages Ltd. 65. Bestway Cement Ltd. 66. Cherat Cement Company Ltd. 67. D.G. Khan Cement Company Ltd. 68. Dewan Cement Ltd. (Pakland

Cement Ltd.) 69. Fauji Cement Company Ltd. 70. Fecto Cement Ltd. 71. Lucky Cement Ltd. 72. Maple Leaf Cement Factory Ltd. 73. Pioneer Cement Ltd. 74. Attock Refinery Ltd. 75. Japan Power Generation Ltd. 76. Karachi Electric Supply

Corporation Ltd.

77. Kohinoor Energy Ltd. 78. Mari Gas Company Ltd. 79. National Refinery Ltd. 80. Pakistan Oilfields Ltd. 81. Pakistan Refinery Ltd. 82. Pakistan State Oil Company Ltd. 83. Shell Pakistan Ltd. 84. Southern Electric Power Co. Ltd. 85. Sui Northern Gas Pipelines Ltd. 86. Sui Southern Gas Company Ltd. 87. The Hub Power Company Ltd. 88. Pakistan International Airlines

Corporation Ltd. 89. Pakistan National Shipping

Corporation. 90. Pakistan Telecommunication

Company Ltd. 91. Lakson Tobacco Company Ltd. 92. Pakistan Tobacco Company Ltd. 93. Thal Jute Mills Ltd. 94. Bata Pakistan Ltd. 95. Ghani Glass Ltd. 96. National Foods Ltd. 97. Nestlé Pakistan Ltd. 98. Pakistan Services Ltd. 99. Rafhan Maize Products Co. Ltd. 100. Service Industries Ltd. 101. Tri-Pack Films Ltd. 102. Unilever Pakistan Foods Ltd. 103. Unilever Pakistan Ltd.

3.3 VARIABLES USED IN THE STUDY

In this research work, an attempt is made to logically relate the two sets of variables ---

Working Capital Management and Profitability, and Liquidity and Profitability. Neither

of the two variables can be directly associated with each other since none of them has

distinct values for its measurement. Hence, both the sets of variables are replaced by

discreet and measurable variables so as to be able to make a statistical relationship

between them. In addition to that, some control variables are also employed to develop a

better understanding of the true linkage between efficient management of working capital

and profitability.



43

3.3.1 Comparison of Variables used for Measuring

the Efficiency of Working Capital Management

Different researchers have suggested diverse variables for the measurement of working

capital management of an organization. Some of these are the Net Trade Cycle, the

Weighted Cash Conversion Cycle and the Optimal Cash Conversion Cycle. However,

each of these methods has got its own deficiencies and, thus, is not appreciated by many

researchers. The variable most widely used for the measurement of Working Capital

Management is the “Cash Conversion Cycle” (abbreviated as the “CCC”). In this

section, variables mentioned above are briefly discussed so as to enable the reader to

make a coherent comparison amongst them.

3.3.1.1 The Net Trade Cycle

Shin and Soenen (1998), in their article “Efficiency of Working Capital Management and

Corporate Profitability”, used the Net Trade Cycle for measuring Working Capital

Management as a variable that affected profitability.2 To compute the Net Trade Cycle,

number of Days Inventory, Receivables, and Payables are all divided by the Sales figure

and the resultant figure is multiplied by 365. Nobanee (2009) elaborates the standpoint of

Shin and Soenen and states, “Shin and Soenen (1998) also argue that the net trade cycle

is a better working capital efficiency measure compared with the cash conversion cycle

and the weighted cash conversion cycle because it indicates the number of "day sales" the

company has to finance its working capital and the working capital manager can easily

estimate the financing needs of working capital expressed as the function of the expected

sales growth.”3

Limitation: While calculating the Net Trade Cycle, the three components of it, i.e.

the receivables, inventory and payables are all taken as a percentage of Sales. In fact, the

later two components --- the inventory and the payables --- are not elements of Sales at

all and must be regarded as percentages of the Cost of Sales instead.

3.3.1.2 The Weighted Cash Conversion Cycle

Gentry et al (1990) proposed a Weighted Cash Conversion Cycle for measuring the

management of working capital which incorporated the timing as well as the amount of



44

cash involved separately in each phase of the cycle.4 Nobanee (2009) defines the

Weighted Cash Conversion Cycle as “---- the weighted number of days funds are

committed in receivables, inventories and payables, less the weighted number of days

financial flows are deferred to suppliers.” 5

Limitation: The inclusion of the quantity of funds involved in each component makes

the Weighted Cash Conversion Cycle too difficult to be computed. Moreover, the

calculation of Weighted Cash Conversion Cycle needs the brake up of inventory into raw

materials inventory, work in progress inventory, and finished goods inventory ---- an

information that is not always available with the researcher.

3.3.1.3 The Optimal Cash Conversion Cycle

Haitham Nobanee (2009), in his recent work, introduced, and suggested the use of,

Optimal Cash Conversion Cycle as the more accurate and comprehensive measure of

working capital management. He stressed on the need to identify optimal lengths of

Inventory, Receivable and Payable Conversion periods where the carrying costs as well

as the opportunity costs of holding Inventory, Receivables and Payables are minimized in

order to minimize the total costs. Recalculating the Cash Conversion Cycle with these

optimal values, the firm would come up with an Optimal Cash Conversion Cycle which,

he thought, could provide the best estimation of the efficiency of Working Capital

Management in augmenting Profitability. He defined the term Optimal Cash Conversion

Cycle as the optimal length of the Inventory Conversion Period plus the optimal length of

the Receivable Collection Period minus the optimal length of the Payable Deferral

Period. 6

Limitation: By applying the concept of Optimal Cash Conversion Cycle in his study,

Nobanee found a strong positive relationship of the cycle with profitability of the sample

firms, which is in clear contrast with all previously done studies that point toward a

negative association between the two variables. Hence, this newer and more complex

variable needs to be properly researched and its potential impact on profitability requires

to be thoroughly investigated before its further application.



45

3.3.1.4 The Cash Conversion Cycle

The Cash Conversion Cycle (CCC) was first introduced by Richards and Laughlin in

1980 in their article “A Cash Conversion Cycle Approach to Liquidity Analysis”.7 The

term is defined by Moss and Stine (1993) as “--- the length of time between cash

payments for purchase of raw materials and the collection of receivables associated with

the sale of the finished goods.”8 (For more definitions of Cash Conversion Cycle, see

Chapter 1)

Cash conversion cycle has also been assigned other names by some authors. For instance,

Bodie and Merton (2000) called it the Cash Cycle Time and defined it as “the number of

days between the date the firm must start to pay cash to its suppliers and the date it begins

to receive cash from its customers.”9 Similarly, Jordan (2003) termed it the Cash Cycle

and explained it as “the number of days that pass before we collect the cash from sale,

measured from when we actually pay for the inventory.”10 Finally, Eljelly (2004), in his

work involving the cash conversion cycle, named it the Cash Gap and described it as a

variable that “measures the length of time between actual cash expenditures on

productive resources and actual cash receipts from the sale of products or services.”11

Cash Conversion Cycle is the most widely used and probably the most reliable variable

known so far for measuring the management of working capital for any given

organization. Its authenticity and viability is endorsed by many of the previous

researchers in the field of Working Capital Management. Given below are some of the

remarks about the effectiveness of Cash Conversion Cycle by different authors:

“The cash conversion cycle is used as a comprehensive measure of WCM.”12

“The CCC is a dynamic measure of ongoing liquidity management, since it

combines both balance sheet and income statement data to create a measure with

a time dimension.”13

“A useful way of assessing the liquidity of firms is with the cash conversion cycle

(CCC).”14



46

“The Cash Conversion Cycle (CCC) is used as a comprehensive measure of

working capital as it shows the time lag between expenditure for the purchases of

raw materials and the collection of sales of finished goods.”15

“The cash conversion cycle introduced by Richards and Laughlin (1980) is a

powerful performance measure for assisting how well a company is managing its

working capital.”16

Keeping in view the recommendations given by previous authors about the significance

of Cash Conversion Cycle, this study also employed the same variable for a better

measurement of Working Capital Management of sample firms.

3.3.1.4.1 Measuring the Cash Conversion Cycle

There are three components of Cash Conversion Cycle. These are the Receivable

Collection Period, the Inventory Conversion Period and the Payable Deferral Period.

The Cash Conversion Cycle can be calculated as:

Cash Conversion Cycle = Receivable Collection Period + Inventory Conversion Period –

Payable Deferral Period

3.3.1.4.2 Measuring the Components of Cash Conversion Cycle

3.3.1.4.2.1 Receivable Collection Period

Receivable Collection Period is the number of days (on average) for which the company

receivables remain unsettled. It is calculated as:

Receivable Collection Period = (Receivables/Sales) × 365

3.3.1.4.2.2 Inventory Conversion Period

Inventory Conversion Period is the number of days (on average) for which a company

retains its Inventory. It is calculated as:

Inventory Conversion Period = (Inventory/Cost of Sales) × 365

3.3.1.4.2.3 Payable Deferral Period

Payable Deferral Period is the number of days (on average) it takes a firm to pay off its

credit purchases. It is calculated as:



47

Payable Deferral Period = (Payables/Cost of Sales) × 365


Liquidity

Numerous variables have been used so far for measuring the Liquidity of firms by

researchers in the field of Corporate Finance. A few of them have been briefly described:

3.3.2.1 The Cash Ratio

The Cash ratio is a measure of the firm’s ability to pay for its short-term debt

commitments through Cash or the equivalents of it.

Mathematically, the Cash ratio is computed as:

Cash Ratio = (Cash or the Equivalents of Cash)/Current Liabilities

Limitation: Organizations of certain nature keep very low amounts of cash or cash

equivalents for the other components of their current assets can be very readily converted

into cash without much delay. For them the cash ratio presents a very deceptive picture of

their Liquidity.

3.3.2.2 The Quick Ratio

The Quick ratio represents the degree of a firm’s capacity to use its quick assets to offset

its current or short-term debts. Quick assets denote current assets excluding the inventory.

Mathematically, the Quick ratio is computed as:

Quick Ratio = (Current Assets - Inventory)/Current Liabilities

Limitation: The inventory of certain kinds of firms can be converted into cash as

easily as the other components of their current assets. Besides, there are certain

organizations that keep very large quantities of inventory that constitutes more than 90%

of their current assets, depending on the nature of their businesses. The quick ratio might,

thus, be misleading if used to determine the Liquidity of such types of organizations.

3.3.2.3 The Current Ratio

The Current ratio is a measure of the degree to which a firm can repay its outstanding

liabilities that might become due in the short-run.



48

The Current ratio is calculated as:

Current Ratio = Current Assets/Current Liabilities

A high value of the ratio would connote a higher level of liquidity for a firm which

represents a higher periphery of safety for the firm to pay its short-term debts.

Current ratio is a measure most widely used by the researchers for measuring Liquidity.

For most firms, the ratio offers a good estimate of their Liquidity. Hence, this research

study also made use of the Current Ratio for assessing the Liquidity of its sample firms.


Profitability

Most of the research work done on the influence of working capital management on a

firm’s profitability involves one of the two variables for measuring profitability. These

are the “Return on Assets” and the “Gross Operating Profit”. This section discusses both

the profitability variables to check out the most suitable one for use in this study:

3.3.3.1 The Return on Assets

The Return on Assets (ROA) is the ratio of Earnings before Interest and Taxes to Total

Assets.

Mathematically, the Return on Assets is computed as:

Return on Assets = Earnings before Interest and Taxes/ Total Assets

Limitation: The Return on Assets variable takes into account the profit obtained both

from the operating as well as the financing and/or investing activities. In this research

study, however, an attempt is made to relate an Operating Variable, i.e. the Cash

Conversion Cycle only with the Operating Performance of a firm. Hence, Return on

Assets might not be the most appropriate variable for measuring a firm’s Operating

Profitability although most of the researchers prefer using ROA as a performance

indicator.



49

3.3.3.2 The Gross Operating Profit

The other way to measure a firm’s Profitability is by Gross Operating Profit. It is the

dollar value of Sales less Cost of Sales divided by the Total Assets less Financial Assets.

Gross Operating Profit = (Sales – Cost of Sales)/(Total Assets – Financial Assets)

The Gross Operating Profit gives a picture of the operating performance of a firm --- a

performance that is dependent on the operating activities carried out by the management,

most of which are part of the working capital management.

Lazaridis and Tryfonidis also supported the use of Gross Operating Profit for profitability

measurement because, according to them, “we want to associate operating ‘success’ or

‘failure’ with an operating ratio and relate this variable with other operating variables (i.e.

cash conversion cycle).”17 Hence, the gross operating profit seems to be a more

appropriate and precise variable for representing profitability.

However, from the source data, Financial Assets could not be isolated or set apart from

the Total Assets figure and the total value of financial assets for any firm was unknown

due to which it was impractical to calculate the Gross Operating Profit for firms under

study. To compensate for that, therefore, two, instead of one, profitability measures were

used --- the Return on Assets and the Operating Profit to Sales.

3.3.3.3 The Operating Profit to Sales

A firm’s operating performance can also be judged by its Operating Profit to Sales ratio.

Mathematically, the Operating Profit to Sales is computed as:

Operating Profit to Sales = Operating Profit/Net Sales

3.3.4 Control Variables used and their Measurement

There are some variables that not only have a significant impact on a firm’s profitability

but also are likely to influence the way working capital is managed. A measurement and

analyses of these variables might help in developing a better understanding of the

relationship that exists between the efficient management of working capital and

corporate performance. This report also contained, thus, the following three such

variables commonly known as the control variables:



50

3.3.4.1 The Natural Logarithm of Sales

The Natural Logarithm of Sales is a variable used for determining the size of the sample

companies, measured in Sales volume. It is obtained by taking the Natural Log (LN) of

the Sales figure.

3.3.4.2 The Sales Growth

This variable is used to determine the level of growth in Sales in each passing year. It is

calculated as:

Sales Growth = (Sales during Current Year - Sales Previous Year)/Sales Previous Year

3.3.4.3 The Financial Leverage

Financial Leverage is used to gauge the total debt obligations of a firm as a percentage of

its total assets. It is computed as:

Financial Leverage = Total Liabilities/Total Assets

3.4 STATISTICAL TOOLS USED IN THE STUDY

This study made use of the Statistical tools for both its descriptive and quantitative

analysis. The software used for this purpose was SPSS 16. The Mean and Standard

Deviation were used in the descriptive portion of the analyses to determine the Mean

values of each set of variables and their Standard Deviation. In the quantitative analysis

portion, however, a statistical Correlation analysis was made to determine the

relationship between an efficient management of working capital and corporate

profitability for Sample 1 as well as for Sample 2. The Correlation analysis was also

made to assess the impact of liquidity on profitability of both the samples separately. It is

important to mention that separate Correlation analyses were made for the two distinct

samples used in the study and also for each individual firm included in both samples.

The Pearson Product Moment Coefficient of Correlation was used throughout the study.

(The Correlation Coefficient is a measure of the degree to which two or more variables

are linearly related.)



51

The Quantitative analyses also included Multiple Regression analyses in order to shed

more light on, and develop a better understanding of, the relationship of WCM and

corporate performance, and that between the Liquidity and Profitability.

3.5 THE REGRESSION MODEL

The Multiple Regression analysis was employed in the study to explore the combined

effect of the variables of working capital management on profitability.

The Regression Equation for Sample 1 follows:

ROA ot = β0 + β1 (RCP ot) + β2 (ICP ot) + β3 (PDP ot) + β4 (CCC ot) + β5 (CR ot) + β6

(LNS ot) + β7 (SG ot) + β8 (FL ot) + ε

The Regression Equation for Sample 2 is:

ROA pt = β0 + β1 (RCP pt) + β2 (ICP pt) + β3 (PDP pt) + β4 (CCC pt) + β5 (CR pt) + β6

(LNS pt) + β7 (SG pt) + β8 (FL pt) + ε

Where:

ROA ot = Return on Assets of firm o at time t; o = 1, 2, 3, …, 40 SMEs listed in KSE

ROA pt = Return on Assets of firm p at time t; p = 1, 2, 3, …, 103 Large Companies

listed in KSE

β0 = The intercept of equation

t = Time = 1,2,3,4 Years

RCP = Receivable Collection Period

ICP = Inventory Conversion Period

PDP = Payable Deferral Period

CCC = Cash Conversion Cycle

CR = Current Ratio

LNS = Natural Logarithm of Sales

SG = Sales Growth

FL = Financial Leverage

ε = The Error Term



52

3.6 THE STRUCTURE OF DATA ANALYSES

The data gathered during the research process was analyzed in two ways; the descriptive

and the quantitative analysis. Both are discussed briefly:

3.6.1 The Descriptive Analysis

In the descriptive portion of the analyses, the gathered data was aptly arranged in the

form of tables and all the relevant ratios and variables pertaining to WCM, liquidity,

profitability and the control variables were worked out so that the variables could be

easily interrelated through the use of Correlation and Regression. The Mean values and

the Standard Deviation of each variable were also computed separately so as to be able to

study each variable individually.

3.6.2 The Quantitative Analysis

In the quantitative analysis, each sample firm was separately analyzed by making use of

Statistical Correlation to determine the impact of WCM and Liquidity on the Profitability

of each individual firm under study. After that, the firms were grouped in their respective

samples and the Correlation analysis was applied to each of the samples entirely. The

Multiple Regression analyses were also performed for both the samples to determine the

causal associations of the components of WCM, liquidity and the control variables with

that of the Profitability variable. Finally, a comparison was made of the effect of WCM

and Liquidity on the Profitability of Sample 1 with that of Sample 2.



53

END NOTES

1 The detailed information regarding SME Definitions used by various institutions in Pakistan and the ones used in selected Asia Pacific Economic Cooperation (APEC) member countries can be found at: http://www.smeda.org.pk/main.php?id=2

2 Shin, H.H and Soenen, L. (1998). “Efficiency of Working Capital Management and Corporate Profitability”. Financial Practice and Education. Vol. 8 No. 2. pp 37-45.


4 Gentry, A., Vaidyanathan, R., Wai, L., (1990). “A Weighted Cash Conversion Cycle”. Financial Management. 19, No. 1. pp. 90-99.

5 Nobanee, Haitham., (September 10, 2009). Op.cit.

6 Nobanee, Haitham., (September 10, 2009). Op.cit.

7 Richards, D., Laughlin, J., (1980). “A Cash Conversion Cycle Approach to Liquidity Analysis”. Financial Management. Vol. 9, No. 1. pp. 32-38.

8 Moss, J. D. and Stine, B., (1993). “Cash Conversion Cycle and Firm Size: A Study of Retail Firms”. Managerial Finance. Vol. 19 No. 8, pp. 25-34.

9 Bodie, Z. and Merton, R. C., (2000). “Finance”. International Edition. Prentice-Hall, New Jersey. p. 89.

10 Jordan, R. W., (2003). “Fundamentals of Corporate Finance”. 6th Edition. McGraw-Hill Companies, Boston. p. 643.

11 Eljelly, A. M. A., (2004). “Liquidity-Profitability Tradeoff: An Empirical Investigation in an Emerging Market”. International Journal of Commerce and Management. Vol. 14. No. 2. pp. 50.

12 Deloof, Marc. (2003). “Does Working Capital Management Affect Profitability of Belgian Firms?” Journal of Business, Finance and Accounting. Vol. 30. pp. 573-88.

13 Jose, M. L., Lancaster, C. and Stevens, J. L., (1996). “Corporate Returns and Cash Conversion Cycles”. Journal of Economics and Finance. Vol. 20. No.1. pp. 33-46.

14 Moss, J. D. and Stine, B., (1993). Op.cit.

15 Padachi, K., (2006). “Trends in Working Capital Management and its impact on Firms’ Performance: An Analysis of Mauritian Small Manufacturing Firms”. International Review of Business Research Papers. Vol. 2. No. 2. pp. 45 -58.


17 Lazaridis, Ioannis & Tryfonidis, Dimitrios., (June 2006). “The relationship between working capital management and profitability of listed companies in the Athens Stock Exchange”. Journal of Financial Management and Analysis. Vol. 19. No. 1. pp. 26 – 35.

Chapter 4 Collection of Data


54

CHAPTER 4

COLLECTION OF DATA

This chapter includes the relevant and the required financial information of all the sample

firms under study. The information was, as mentioned in the previous chapters, obtained

from an official document named, “Balance Sheet Analysis of Joint Stock Companies

Listed on the Karachi Stock Exchange --- (2003-2008)”, published by the Statistics and

DWH Department of the State Bank of Pakistan (SBP).

The ensuing pages represent, in a coherent manner, the required financial statistics of all

the sample firms one by one in their respective tables. The facts and figures of each of the

samples are separately presented and hence the chapter is segregated into two basic

portions --- the first portion describing the information related to firms included in

Sample 1 and the second portion unfolding those in Sample 2.

All the figures mentioned in the following pages pertaining to the sample organizations

have been very carefully and precisely picked from the source document:



55

4.1: REPRESENTATION OF THE COLLECTED DATA OF SMALL COMPANIES LISTED IN KSE (SAMPLE 1) TABLE 4.1: Aruj Garment Accessories Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 46.8 80.5 84.8 193.6 231.2 263.4

COST OF SALES 44.5 71.9 75.7 166.8 202.3 236

RETURN ON ASSETS IN %AGE -4.3 2.2 2.3 10.9 8.6 5.7

OPERATING PROFIT -1.9 4.2 4.5 19.3 21 19

INVENTORY 7.8 15.8 28.8 44.8 65.6 61.7

RECEIVABLES AS % OF SALES 5.6 4.8 5.1 1.6 2 0.5

CURRENT LIABILITIES 36.5 47.6 55.5 73.6 92.8 90.1

CURRENT RATIO IN %AGE 46.8 62.6 91.9 102.2 108.9 103.4

SALES GROWTH IN %AGE -16.7 72 5.3 128.3 19.4 13.9

TOTAL ASSETS 84.3 91.1 132.8 159.9 189.8 213.1

TOTAL LIABILITIES 46.4 52.4 57.5 78 98.7 121.2

TABLE 4.2: International Knitwear Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 82 125.7 83 85.9 145.3 180.2

COST OF SALES 74.9 74.1 73.4 78.7 130.8 154.2

RETURN ON ASSETS IN %AGE 1.5 75.7 3.1 3 8.6 15.9

OPERATING PROFIT 2.5 47.6 2.8 3.1 10.1 19.7

INVENTORY 12.8 12.8 8.8 12.9 14.1 10.4

RECEIVABLES AS % OF SALES 25.2 14.3 26.4 34.6 31.9 27.7



SALES GROWTH IN %AGE 20.4 53.3 -34 3.5 69.2 24

TOTAL ASSETS 64.6 61.2 57.2 69.2 89.2 102.1

TOTAL LIABILITIES 44.8 46.4 42.5 53.8 67.5 66.5



56

TABLE 4.3: Mubarak Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 87.4 80.2 47.1 76.1 92.1 83.5

COST OF SALES 79.2 92.9 54.8 68.7 79.8 85.6

RETURN ON ASSETS IN %AGE 0.9 -32.5 -30.7 -2.9 173.7 -12.9

OPERATING PROFIT 1.6 -42.4 -30.2 0.5 199.4 -8.9

INVENTORY 40.8 10.2 4.9 4.2 0 0

RECEIVABLES AS % OF SALES 26.2 30 52 36.1 3.5 31.7


CURRENT RATIO IN %AGE 192.2 58.8 30.4 32.2 45 36.3

SALES GROWTH IN %AGE 42.6 -8.2 -41.3 61.6 21 -9.3

TOTAL ASSETS 168.9 132.2 103.6 105.2 112.5 99.9


TABLE 4.4: Mukhtar Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 247.2 277.6 164.9 300.2 211.1 114.5

COST OF SALES 236.8 268.1 183 289.6 204 18.5

RETURN ON ASSETS IN %AGE 3.4 -123.2 -15.6 3.6 1.9 82.5

OPERATING PROFIT 4.2 -146.5 -21.2 5.5 2.7 94.3

INVENTORY 4.3 12.3 26.6 10 12 0

RECEIVABLES AS % OF SALES 9.2 16.9 7.6 10.4 15 24


CURRENT RATIO IN %AGE 85 162.2 122.3 138.4 163.8 163.7

SALES GROWTH IN %AGE 15.5 12.3 -40.6 82 -29.7 -45.8

TOTAL ASSETS 118.7 161.1 136.4 151.2 143.7 113.6




57

TABLE 4.5: Regent Textile Industries Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 105 78.1 71.7 202.2 233.5 281.4

COST OF SALES 99 79.8 66 181.7 216.6 265.1

RETURN ON ASSETS IN %AGE -3.2 -1.5 2.3 7 4.9 1.3

OPERATING PROFIT 5.8 -2.2 5.1 19 15.9 14.3

INVENTORY 1.3 14.9 19.2 17.7 30.2 27.4

RECEIVABLES AS % OF SALES 12.9 5 38.6 1.6 1.5 9.8

CURRENT LIABILITIES 195.4 183.4 45.5 198.2 214 222.9


SALES GROWTH IN %AGE -52.7 -25.6 -8.2 182 15.5 20.5

TOTAL ASSETS 204.2 185.7 205.3 233.4 262.9 268.2


TABLE 4.6: Safa Textiles Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 132.6 158.5 180.5 227.8 265.7 367.4

COST OF SALES 112.3 138.3 156.5 196.5 223.9 328.3

RETURN ON ASSETS IN %AGE 5.1 9.5 8.7 7.1 9 2.6

OPERATING PROFIT 2.9 5 6.8 7.5 16.4 9.4

INVENTORY 8.9 6.5 14.2 19.9 69.9 68.6

RECEIVABLES AS % OF SALES 2 0.6 2.9 0 0 2.1

CURRENT LIABILITIES 9 6.6 26.8 32 83.8 100.1

CURRENT RATIO IN %AGE 232.2 260.6 104.9 98.4 98 88

SALES GROWTH IN %AGE 21.5 19.5 13.9 26.2 16.6 38.3

TOTAL ASSETS 39.6 39.8 64.1 73.2 133.7 148.2

TOTAL LIABILITIES 9 6.6 26.8 33 84.1 100.1



58

TABLE 4.7: Amin Spinning Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 197.3 221.9 141.2 278.2 306 330.8

COST OF SALES 219.1 243.9 152.5 275.9 294 325.1

RETURN ON ASSETS IN %AGE -37.2 140.9 -13.9 169.3 -4.7 -9

OPERATING PROFIT -31.8 201.9 -18.6 249.5 -6.7 -11.6

INVENTORY 0 12.6 16.4 16.8 18.5 14.4

RECEIVABLES AS % OF SALES 2 7.3 2.5 0.3 1.1 0.6



SALES GROWTH IN %AGE -11.6 12.5 -36.4 97 10 8.1

TOTAL ASSETS 163.7 141.3 158.4 147.3 145.1 130.4


TABLE 4.8: Mehr Dastagir Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 120.6 143.8 322.7 247.9 239.2 230.3

COST OF SALES 146.5 171.2 307.7 235.6 225.3 262.3

RETURN ON ASSETS IN %AGE 2.5 1.5 0.8 0.2 0.1 -12.7

OPERATING PROFIT 18 13.9 9.7 3.3 3.2 -40

INVENTORY 5.7 61.2 22.9 7 3.4 13.4




SALES GROWTH IN %AGE 33.7 19.2 124.4 -23.2 -3.5 -3.7

TOTAL ASSETS 332.7 408.5 628.8 418.4 380.9 336

TOTAL LIABILITIES 357.8 432.1 538.3 328.4 291.9 134



59

TABLE 4.9: Bannu Woolen Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 293.8 269.1 147.8 288.9 296 332.2

COST OF SALES 234.7 230.3 127.7 213.7 222 319.7


OPERATING PROFIT 37.3 20.3 7.4 43.9 45 -16.9

INVENTORY 47.5 79 132.4 95.3 109.6 140




SALES GROWTH IN %AGE 18 -8.4 -45.1 95.5 2.5 12.2

TOTAL ASSETS 572.5 718.4 658.1 619.1 669 713.6


TABLE 4.10: Kashmir Polytex Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 147 192.2 251.8 230.8 83.8 83.8

COST OF SALES 111.9 153.5 218.6 230.8 116 116

RETURN ON ASSETS IN %AGE -2.2 0.1 -2.9 -17.4 -24.8 -24.8

OPERATING PROFIT -2.6 3.9 -2.8 -36.1 -13.2 -13.2

INVENTORY 58.4 79.2 87.1 69.7 4.9 4.9



CURRENT RATIO IN %AGE 73.9 79.4 92.8 43 29.2 29.2

SALES GROWTH IN %AGE 37.5 30.7 31 -8.3 -63.7 0

TOTAL ASSETS 281.6 283.4 279 260.5 88 88




60

TABLE 4.11: Moonlite (Pak) Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 271.5 240.4 320.3 249.6 156.6 156.6

COST OF SALES 235.9 205.9 271 221.3 152.2 152.2

RETURN ON ASSETS IN %AGE 3.1 2.5 1.8 -6.7 73.8 73.8

OPERATING PROFIT 22.4 15.7 18 -4.6 216 216

INVENTORY 144.9 164.1 176.2 152.9 126.8 126.8



CURRENT RATIO IN %AGE 226.2 167 146.3 114.8 964.9 964.9

SALES GROWTH IN %AGE 31.3 -11.5 33.2 -22.1 -37.3 0

TOTAL ASSETS 274.3 285.5 355.2 313.7 286.5 286.5


TABLE 4.12: Bawany Air Products Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 59.7 69 62.8 61.8 77.2 81.2

COST OF SALES 45.7 57.4 62.1 64.5 71.9 74

RETURN ON ASSETS IN %AGE 1.3 -0.9 -8.1 -6.3 -6 -11.8

OPERATING PROFIT 1.7 -0.4 -11.9 -9.7 -8.2 -7.9

INVENTORY 2.6 2.5 1.8 0.9 0.9 1.1

RECEIVABLES AS % OF SALES 20.6 13.3 0 12.8 9.5 10


CURRENT RATIO IN %AGE 93.5 78.6 22.1 17 15 13.5

SALES GROWTH IN %AGE -19.2 15.6 -9 -1.6 24.9 5.2

TOTAL ASSETS 126.6 131.4 160.4 188.5 197.5 204.3




61

TABLE 4.13: Data Agro Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 21.6 26.7 29.4 29.9 29.2 58.9

COST OF SALES 17.7 18.7 20.1 25.7 22.5 51.6

RETURN ON ASSETS IN %AGE -1.5 4.9 6.5 -1.6 0.6 0.5

OPERATING PROFIT -0.8 3.3 4.2 -1.4 0.8 0.7

INVENTORY 0.8 1.2 4.5 7.3 16 9.7


CURRENT LIABILITIES 48.2 45.7 43.8 52.6 12.8 52

CURRENT RATIO IN %AGE 17.2 47 57.5 46 251.6 75.8

SALES GROWTH IN %AGE 5.4 23.6 10.1 1.7 -2.3 101.7

TOTAL ASSETS 54.4 63.2 64.7 102.5 103.4 103.7


TABLE 4.14: Leiner Pak Gelatine Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 196.8 216.4 229.9 265.8 273.5 254.4

COST OF SALES 155.3 175.6 176.8 203.5 227.6 216.2

RETURN ON ASSETS IN %AGE 4.6 3 5.3 7.7 1.9 0.1


INVENTORY 64.9 80.1 0 111.9 112.8 130.6




SALES GROWTH IN %AGE 18.8 10 6.2 15.6 2.9 -7

TOTAL ASSETS 228.1 264 280.7 265.8 271.4 359.7




62

TABLE 4.15: Sardar Chemical Industries Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 100.5 108.9 103.8 107.1 117.5 125.1

COST OF SALES 77.9 85.5 81.9 80.3 84 95

RETURN ON ASSETS IN %AGE -1.7 0.8 -0.6 0.7 2.9 1.3


INVENTORY 53.9 44.6 42.8 40.4 38.8 39.5

RECEIVABLES AS % OF SALES 43.2 45.6 50.9 0 56 58.7



SALES GROWTH IN %AGE -7.7 8.4 -4.7 3.2 9.7 6.5

TOTAL ASSETS 156.5 157.2 154.4 153.6 163.1 164.8

TOTAL LIABILITIES 69 68.7 67.4 66.2 72.9 74.1

TABLE 4.16: Bela Automotives Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 31.5 61.5 81.1 94.4 64.6 84.5

COST OF SALES 26.3 49.3 66.3 83.8 55.7 71.3

RETURN ON ASSETS IN %AGE 0.5 2.2 2.2 1.7 0.5 1.4


INVENTORY 26.1 20.8 21.1 23.8 26.5 30.3





TOTAL ASSETS 234.2 240.9 308.5 315.8 314.1 323.1




63

TABLE 4.17: Johnson & Philips (Pakistan) Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 83.7 62.6 162.7 233.3 377.4 251.8

COST OF SALES 88.5 66.1 131.5 207.5 309.3 213

RETURN ON ASSETS IN %AGE -29 -3.7 10.1 2.9 7.9 1.9

OPERATING PROFIT -31.3 -4.6 24.6 12.6 34.7 17.1

INVENTORY 0 37.4 38.1 40.9 43.8 41.4


CURRENT LIABILITIES 374.8 161 163.8 210.1 178.3 177.9


SALES GROWTH IN %AGE 0 -25.2 159.9 43.4 61.8 -33.3

TOTAL ASSETS 290.3 197.1 199.6 236.5 314.1 408.8

TOTAL LIABILITIES 499.5 196 178.8 213.6 272.9 257.1

TABLE 4.18: The Climax Engineering Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 164.3 188 262.7 224.1 232.8 226.2

COST OF SALES 143.6 179.3 246 210.1 219.7 217.6

RETURN ON ASSETS IN %AGE -8.1 0.4 0.2 1.5 1.9 -5.2

OPERATING PROFIT -9.8 4.3 2.1 9.8 21.3 -28.8

INVENTORY 218.4 217.8 243 246.9 251.9 250.9

RECEIVABLES AS % OF SALES 24.6 19.7 15 14.5 23 25.9

CURRENT LIABILITIES 430 305.5 362.8 349.3 286.2 309.8


SALES GROWTH IN %AGE -0.9 14.4 39.7 -14.7 3.9 -2.8

TOTAL ASSETS 320.1 565.6 581.7 595.5 738.2 735.6




64

TABLE 4.19: Transmission Engineering Industries Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 58.1 85.5 98.1 115.6 106.6 97.5

COST OF SALES 51.5 70.2 82.9 103.4 105.6 98.4

RETURN ON ASSETS IN %AGE -7.5 3.9 4.4 -3.7 -30.6 -27.1

OPERATING PROFIT 0.9 9.1 11.2 3.8 -20.9 -13.3

INVENTORY 5.2 10.4 5.8 6.6 6.8 8.8




SALES GROWTH IN %AGE 69.4 47.2 14.7 17.8 -7.8 -8.5

TOTAL ASSETS 66.3 92.4 104.6 104 97.3 103.7


TABLE 4.20: Dadabhoy Sack Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 70.8 102.9 100.3 96.8 69.4 47.5

COST OF SALES 65.2 81 86.8 77.8 54.7 50.2

RETURN ON ASSETS IN %AGE -32.9 26 5.1 0.8 0.8 -16.2


INVENTORY 2.3 0.9 4 11 4.8 0



CURRENT RATIO IN %AGE 181 298.5 373.4 193 209.2 138.6

SALES GROWTH IN %AGE 1.1 45.3 -2.5 -3.5 -28.3 -31.6

TOTAL ASSETS 40.7 60.5 61.3 92.8 93 82.6




65

TABLE 4.21: Pakistan Paper Products Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 147.7 158.4 173.5 227.7 222 241.7

COST OF SALES 110.8 119.5 124.6 161.9 160.6 183.2



INVENTORY 29.1 30.3 36.3 47.1 60.3 75





TOTAL ASSETS 95.6 98.1 271.9 289.6 335 351.4


TABLE 4.22: Ideal Energy Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 334.9 247.2 208.3 9.7 7.2 32.5

COST OF SALES 295.8 217.8 211.1 24 13.3 45.5

RETURN ON ASSETS IN %AGE 9.3 7.5 -2.6 -8.7 -4.1 -7.8

OPERATING PROFIT 34 24.9 -7.6 -17.1 -8.8 -16

INVENTORY 32.2 10.9 5.3 5.5 5.6 6.4

RECEIVABLES AS % OF SALES 28.2 46.6 63 624.7 695.8 114.5



SALES GROWTH IN %AGE 12.8 -26.2 -15.7 -95.3 -25.8 351.4

TOTAL ASSETS 332.3 320.5 304.2 230.5 215.8 203.9

TOTAL LIABILITIES 87.6 67.3 59.2 8.9 3 7.1



66

TABLE 4.23: S.G. Power Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 181.2 191.9 184.9 200.1 64.8 0

COST OF SALES 150.2 161.2 171.8 220.3 78.6 16.3

RETURN ON ASSETS IN %AGE 5.7 4.6 1.9 -10 -4.6 -6.8

OPERATING PROFIT 25.1 19.6 8.2 -33.7 -14.1 -20

INVENTORY 0 0 0 0 0 0

RECEIVABLES AS % OF SALES 109.7 101.4 131.2 34.7 174.1 0


CURRENT RATIO IN %AGE 319.3 421.3 425.8 860.5 1730.5 1924

SALES GROWTH IN %AGE 10.8 5.9 -3.6 8.2 -67.6 -100

TOTAL ASSETS 396.4 398.1 422 343.3 314.2 292.4

TOTAL LIABILITIES 82 60.2 69.5 26.6 11.8 10

TABLE 4.24: Khyber Tobacco Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 4.9 5.7 7.1 11.5 25.7 69.9

COST OF SALES 6.4 4.5 5.2 7.8 17.6 61.2



INVENTORY 8.3 9.6 3.9 0 4.4 25.5

RECEIVABLES AS % OF SALES 0 0 0 0 0 0



SALES GROWTH IN %AGE -82 16.3 24.6 62 123.5 172

TOTAL ASSETS 13.9 26 9.2 5.1 9.6 35.3

TOTAL LIABILITIES 74.5 86 51.8 46.5 41.2 61



67

TABLE 4.25: Sarhad Cigarette Industries Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 56.8 62.5 72.6 64.9 64.9 102.5

COST OF SALES 55.7 57.2 60.4 54.8 54.8 89.5

RETURN ON ASSETS IN %AGE -3.9 10.6 24.2 16 16 15.3

OPERATING PROFIT -1.2 2.4 8.5 5.9 5.9 9.1

INVENTORY 2.8 5.9 6.4 12.9 12.9 9




SALES GROWTH IN %AGE 3.3 10 16.2 -10.6 0 57.9

TOTAL ASSETS 30.9 22.7 33.9 36.2 36.2 58.1


TABLE 4.26: Amin Fabrics Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 128.1 127.6 154.8 106.2 166.4 166.4

COST OF SALES 120.7 127.7 165.5 111.3 183.6 183.6

RETURN ON ASSETS IN %AGE -12.6 9.4 -15.3 -12.7 -21.2 -21.2

OPERATING PROFIT -7.1 18.3 -18.4 -16.1 -29.3 -29.3

INVENTORY 26.7 48.4 33 61.1 49.7 49.7


CURRENT LIABILITIES 160.9 151.7 172 223.9 261.4 261.4


SALES GROWTH IN %AGE -13.7 -0.4 21.3 -31.4 56.7 0

TOTAL ASSETS 111 121.7 155.8 181.5 179.6 179.6

TOTAL LIABILITIES 160.9 151.7 172 223.9 261.4 261.4



68

TABLE 4.27: Suhail Jute Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 198.2 85.8 208.6 206 236.5 253.7

COST OF SALES 155.7 64.7 202.5 197.5 236 244.4

RETURN ON ASSETS IN %AGE 4.5 3.9 -3.1 0.8 -1.1 2

OPERATING PROFIT 26.1 27.1 -10.5 27.9 19.7 56.2

INVENTORY 40.4 97.1 103.7 63.8 89.6 90.5




SALES GROWTH IN %AGE 13 -56.7 143.1 -1.2 14.8 7.3

TOTAL ASSETS 525.3 570.9 640.2 652.7 724.1 1203.2


TABLE 4.28: Kakakhel Pakistan Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 23.8 19.4 21.6 46 79.3 213.3

COST OF SALES 15.6 13.5 20.4 48.2 78.5 208.1

RETURN ON ASSETS IN %AGE 9.5 7.6 -2.1 -8.2 -4.1 -3.2

OPERATING PROFIT 6.3 5.8 0.1 -7.8 -1.8 -1.7

INVENTORY 0 0 5.7 5.8 13.2 10.3

RECEIVABLES AS % OF SALES 0 0 2.3 4.3 12.1 9.3



SALES GROWTH IN %AGE -15.9 -18.5 11.3 113 72.4 169

TOTAL ASSETS 66.5 76.2 173.3 167.6 177.4 186.5




69

TABLE 4.29: Al-Khair Gadoon Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 68.3 63.5 82.3 179.8 275.2 259.7

COST OF SALES 58.9 55.1 71.3 155.6 238.3 223.8

RETURN ON ASSETS IN %AGE 1.6 3.6 2.7 3.4 -0.9 3.1

OPERATING PROFIT 4.1 6.3 6 8.4 2.2 10.5

INVENTORY 35.9 37.5 56.8 73.9 107.3 123.3


CURRENT LIABILITIES 24.2 27 60.7 78 111.8 139.6


SALES GROWTH IN %AGE 361.5 -7 29.6 118.5 53.1 -5.6

TOTAL ASSETS 152.9 154.6 191.6 211.3 254.2 280.3

TOTAL LIABILITIES 24.2 27 60.7 78 114.5 140.6

TABLE 4.30: Diamond Industries Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 26.6 271.8 158.3 24.4 6.3 0

COST OF SALES 22.8 356.9 218.7 32.3 15.8 9.5

RETURN ON ASSETS IN %AGE 1 -11.9 0 -3.1 -0.2 -7.1

OPERATING PROFIT 3.7 -20.7 7.7 -12.8 -0.4 -27.9

INVENTORY 24.3 28.1 10.9 4.7 0.8 0




SALES GROWTH IN %AGE 63.2 921.8 -41.8 -84.6 -74.2 -100

TOTAL ASSETS 319.6 314.4 428.5 412.2 424.3 394.2




70

TABLE 4.31: Goodluck Industries Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 207.8 194.7 219.7 238 238.9 301.7

COST OF SALES 201 188 212.9 231.3 230.5 292.6



INVENTORY 11.1 11.8 9.9 10.2 12.3 6.9




SALES GROWTH IN %AGE 5.2 -6.3 12.8 8.3 0.4 26.3

TOTAL ASSETS 16 18 15.6 16 18.5 17.5


TABLE 4.32: Grays Of Cambridge (Pakistan) Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 100.8 97.2 100.5 120.3 130.1 138.6

COST OF SALES 65.5 63.4 61.1 74.6 84.4 89.7



INVENTORY 30.4 40.8 47.8 51.9 55.1 63.9




SALES GROWTH IN %AGE -24.7 -3.6 3.4 19.7 8.1 6.5

TOTAL ASSETS 292 291.6 314 297.4 290.1 268




71

TABLE 4.33: Haji Dossa Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 84.8 84.8 103.7 34.1 106.9 101.2

COST OF SALES 79.3 79.3 90.6 24.3 98.5 89.3

RETURN ON ASSETS IN %AGE 0 968.3 40.7 5.3 7.1 3.5


INVENTORY 3.8 2.3 3 49.3 7.8 33.2

RECEIVABLES AS % OF SALES 0 0 1 2.1 1.6 1.7


CURRENT RATIO IN %AGE 78.7 165.2 141 108 127.8 110.4

SALES GROWTH IN %AGE 0 83.8 22.3 -67.1 213.5 -5.3

TOTAL ASSETS 14.4 8.2 18.9 63.6 22.6 57.7


TABLE 4.34: Hashimi Can Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 60.5 72.2 60.3 36 25.1 14.7

COST OF SALES 52.5 59.5 52.7 33.7 25 16.9

RETURN ON ASSETS IN %AGE -4.1 0.3 -3.5 -7.6 -9 -7.4

OPERATING PROFIT -1 3.7 -1.6 -6.1 -7.6 -9.3

INVENTORY 10.3 10.4 10.8 11.1 8.7 8.7



CURRENT RATIO IN %AGE 50.4 67.8 62.7 53 43.1 39


TOTAL ASSETS 135.7 136.3 134 131.2 128.2 128




72

TABLE 4.35: Indus Fruit Products Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2.5 33.3 12.4 24.2 46.9 119.3

COST OF SALES 7.3 40.3 30.7 41.7 69.4 140.3

RETURN ON ASSETS IN %AGE -5.8 -6.3 -16.8 -10.2 -16.5 -16.2

OPERATING PROFIT -9.4 -9.7 -22.4 -14.1 -28.2 -27.7

INVENTORY 28.4 23.9 13.6 11 11.2 31.6




SALES GROWTH IN %AGE 108.3 1232 -62.8 95.2 93.8 154.4

TOTAL ASSETS 161.4 153.4 133.6 138.5 171.4 182


TABLE 4.36: Leather Up Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 80.8 33.7 33.7 35.4 30.5 15.2

COST OF SALES 73.7 35.1 35.1 29.4 31.5 17.3


OPERATING PROFIT -11.2 -6.1 -6.1 1.2 -4.6 -3

INVENTORY 36 35.7 35.7 30.7 26.5 24.6




SALES GROWTH IN %AGE -11.5 -58.3 0 5 -13.8 -50.2

TOTAL ASSETS 112.8 93.1 93.1 73.1 68 66.9




73

TABLE 4.37: Mandviwala Mauser Plastic Industries Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 299.1 271 299.7 230.5 303.1 249.2

COST OF SALES 237 245.7 286.6 188.2 276.5 227.1

RETURN ON ASSETS IN %AGE 4.1 -13.1 -20.8 19.9 -8.7 -9.4

OPERATING PROFIT 18.7 -28 -43 56.6 -19.8 -23

INVENTORY 11.9 11.9 20.8 16 21.3 39.3




SALES GROWTH IN %AGE 22.9 -9.4 10.6 -23.1 31.5 -17.8

TOTAL ASSETS 297.8 268.4 257.7 247.9 265.3 261.9


TABLE 4.38: Pakistan House International Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 33.3 33.6 30.6 26.4 30.8 53.7

COST OF SALES 23.8 24.2 22.4 21.5 24.6 42

RETURN ON ASSETS IN %AGE -1.7 1.2 -10.5 6.4 2.5 0.5

OPERATING PROFIT -0.9 0.8 -10 5.5 2.1 0.5



CURRENT LIABILITIES 7 6 49 29.4 9.3 26.2


SALES GROWTH IN %AGE -34.3 0.9 -8.9 -13.7 16.7 74.4

TOTAL ASSETS 65.9 64.7 97.3 81.3 76 80.9

TOTAL LIABILITIES 7 6 49 29.4 21 26.2



74

TABLE 4.39: Quice Food Industries Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 9.5 17.5 32.2 32.2 52.2 53.5

COST OF SALES 7.1 49.2 25 25 38.5 39.6

RETURN ON ASSETS IN %AGE -2.6 -43.9 302.6 302.6 8.7 8.5

OPERATING PROFIT -6.2 -34.6 206.7 206.7 6.2 6.3

INVENTORY 0 9.2 8.1 8.1 8.1 13.1

RECEIVABLES AS % OF SALES 595.8 244 36 36 37 44.9


CURRENT RATIO IN %AGE 278.7 43 28 28 35.8 44.2

SALES GROWTH IN %AGE 0 84.2 84 0 62.1 2.5

TOTAL ASSETS 236.2 124.7 68.3 68.3 71 73.7


TABLE 4.40: Syed Match Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 30.2 38 40.1 32.1 26.6 30.4

COST OF SALES 32.4 42.6 44.1 36.2 33.5 31.1

RETURN ON ASSETS IN %AGE -23.6 -31 -22.8 -24 -31.5 -8.5

OPERATING PROFIT -4.9 -5.5 -5.3 -5.2 -8.1 -1.7

INVENTORY 5.7 6.5 7.1 6.8 11.5 11.6




SALES GROWTH IN %AGE 1913.3 25.8 5.5 -20 -17.1 14.3

TOTAL ASSETS 20.8 18.4 23.2 21.7 27.6 29.4




75

4.2: REPRESENTATION OF THE COLLECTED DATA OF LARGE COMPANIES LISTED IN KSE (SAMPLE 2) TABLE 4.41: Azgard Nine Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2689 3304 4662.2 6624.7 12937 11827

COST OF SALES 2042.9 2584 3523.7 4732 8362.6 8238.4



INVENTORY 1265.8 1394.7 2123.7 2904 2532.1 4034.1

RECEIVABLES AS % OF SALES 20 28.6 22.2 23 18.3 0

CURRENT LIABILITIES 2388.6 2614 4491 9935.8 10686.3 10353.8


SALES GROWTH IN %AGE 109.6 22.9 41.1 42.1 95.3 -8.6

TOTAL ASSETS 4815.3 6208.8 10510.1 27076.5 29933.9 27338.1


TABLE 4.42: Colony Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2603.2 3641 3693.5 2063.3 5799.9 7020.7

COST OF SALES 2386.8 3481.6 3323.4 1783.5 5061.7 6026.5



INVENTORY 509.2 989.6 1020.8 1298.8 1392.5 1960.3




SALES GROWTH IN %AGE 60 39.9 1.4 -44.1 181.1 21

TOTAL ASSETS 2343.7 4344.5 5321.1 7790.5 9128.9 12651.2




76

TABLE 4.43: Dewan Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2827.5 2860 2007.3 2320.8 2576.1 3232.7

COST OF SALES 2520.1 2614.1 1792.4 1973.8 2201.6 3055.4

RETURN ON ASSETS IN %AGE 1.2 1.5 0.9 1 0.6 -4.9


INVENTORY 730.4 1694.6 1584.6 1456.9 1507.9 1714.9




SALES GROWTH IN %AGE 19 1.1 -29.8 15.6 11 25.5

TOTAL ASSETS 2759.4 3748.7 3424.2 4332.3 4348.5 4317.1


TABLE 4.44: Faisal Spinning Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1864.7 3018.7 2457.8 3236.5 3396.5 3725.5

COST OF SALES 1609.7 2810.9 2154.6 2843.2 3040.3 3353.5

RETURN ON ASSETS IN %AGE 7.1 3.2 5 5 3.8 3.5


INVENTORY 315.4 316.8 698.4 588.1 685.8 877.9




SALES GROWTH IN %AGE 10.8 61.9 -18.6 31.7 4.9 9.7

TOTAL ASSETS 1733.3 2275.6 2819.9 2642.4 2969.9 3041.8




77

TABLE 4.45: Fateh Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 7179.1 7631.2 5919.7 6730.7 6343.5 4794.2

COST OF SALES 6307.2 6720.7 5285 6063.8 5799.3 4350.4

RETURN ON ASSETS IN %AGE 3.3 3.4 2 1.8 1.3 0.4

OPERATING PROFIT 629 651 430.4 450.5 461.3 427.7

INVENTORY 1710.5 2267.8 2492.3 2114.2 2267.6 2125.6




SALES GROWTH IN %AGE 29.4 6.3 -22.4 13.7 -5.8 -24.4

TOTAL ASSETS 5995.6 6883.3 6834.8 7730.6 7920.8 8893.6


TABLE 4.46: Fatima Enterprises Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 4973.6 5372.4 3833 5347.7 6782.4 9736.4

COST OF SALES 4714.3 5065.9 3568.5 5090.6 6306.6 8999.8

RETURN ON ASSETS IN %AGE 3.4 5.2 2.6 -0.7 0.4 1.4


INVENTORY 654.5 841.6 1387.1 1421.7 2104.9 3562.3

RECEIVABLES AS % OF SALES 3.9 4.3 7.4 7 9.8 6.9




TOTAL ASSETS 2317.6 2710.3 3660.8 5158.4 6476.7 8503.4




78

TABLE 4.47: Fazal Cloth Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3176.9 4170.1 3654 5238.2 6074 7113.9

COST OF SALES 2858.1 3732.3 3077.3 4512 5256.7 6170.2


OPERATING PROFIT 268.1 278.5 373.3 498.1 582 915.9

INVENTORY 624.3 1044 1187.3 1402.4 1345.3 2012.3




SALES GROWTH IN %AGE 22 31.3 -12.4 43.4 16 17.1

TOTAL ASSETS 2155.6 3467 4341.5 5143.9 8345.3 9710.6


TABLE 4.48: Gadoon Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 4561.7 7528 4455.1 5718.6 5205.8 6857.9

COST OF SALES 4120.4 5513.5 3913.3 4918.7 4456 6112.3



INVENTORY 898.2 738.6 1957.2 1878.1 1246.9 2527.6


CURRENT LIABILITIES 1761.2 1687.8 2694 3407.9 3267 4918.4


SALES GROWTH IN %AGE 12.3 65 -40.8 28.4 -9 31.7

TOTAL ASSETS 4687.3 4595.4 5765.9 6144.7 5853.6 7542.9




79

TABLE 4.49: Gul Ahmed Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 5581.6 6680.9 5893.1 8245.8 9872 11752

COST OF SALES 4512.8 5625.3 4929.8 7081.2 8446.1 10052.9


OPERATING PROFIT 593 363.2 358.7 548.6 738.5 934.3

INVENTORY 935.1 2043.9 2747 2887.2 2254.1 2915.6


CURRENT LIABILITIES 3027.7 5385.8 5432 5481.4 5653 7151.1


SALES GROWTH IN %AGE -3.4 19.7 -11.8 39.9 19.7 19

TOTAL ASSETS 6096.5 9076.2 9805.2 9978.9 10053.7 12369.5


TABLE 4.50: Gulistan Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3129.4 3904.4 2705.6 3651.7 4326.5 5249.8

COST OF SALES 2791.8 3615.1 2415 3082.9 3756.5 4513.1


OPERATING PROFIT 295.3 256.3 250.7 447.4 459.9 660

INVENTORY 585.8 1097.3 1407.5 1573.2 1892 2872.1



CURRENT RATIO IN %AGE 131.4 113 110.2 149.7 137 123.2

SALES GROWTH IN %AGE 23.9 24.8 -30.7 35 18.5 21.3

TOTAL ASSETS 3000.5 3611.1 4079.7 5757 6639.2 7822




80

TABLE 4.51: Indus Dyeing & Manufacturing Co. Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2465.9 3743.3 3920.3 6176.5 6581.9 7312

COST OF SALES 2054 3284 3174.3 5290.5 5636.8 6413


OPERATING PROFIT 318.5 319 568.5 675.3 909 550.7

INVENTORY 515.9 472.4 1248.5 1467 1251.6 1511.1





TOTAL ASSETS 1947.2 2294.2 5023.5 6402 6683.7 6917.2


TABLE 4.52: Kohinoor Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 5180.1 5537.8 9060.4 6903.6 7140.2 7558.3

COST OF SALES 4498 4822.2 7173.3 5881.8 6094.6 6395.6

RETURN ON ASSETS IN %AGE 3 7.5 7.5 3.1 -0.2 1

OPERATING PROFIT 448.4 596.6 1602.6 803 575.7 1013.2

INVENTORY 931.2 859.3 2860.6 1607.8 1755.1 1673.1




SALES GROWTH IN %AGE -39.9 6.9 63.6 -23.8 3.4 5.9

TOTAL ASSETS 5567.7 5968.5 16263.9 11340 14484 13515.3




81

TABLE 4.53: Mahmood Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3971.7 3971.8 2917.2 3901.3 4518.5 5073.2

COST OF SALES 3703.1 3703.3 2530.3 3497.2 4038 4478.3



INVENTORY 220.7 389 982.1 939.9 1130.1 1647





TOTAL ASSETS 1471 1557.2 2770.8 3191.3 3710.7 4354.3


TABLE 4.54: Masood Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3049.6 3425.6 3245.4 5006.5 5936.7 7884.8

COST OF SALES 2457.2 2799.3 2673.3 4116.5 4949.5 6428.8

RETURN ON ASSETS IN %AGE 3.3 2.6 2.2 2.7 2.6 5


INVENTORY 899.5 1294 1784.1 1891.3 1814 1838.7

RECEIVABLES AS % OF SALES 23 20.6 31.3 28.3 0 24.5




TOTAL ASSETS 3505.9 4336.7 5859.2 6519.3 7326.2 8234.5




82

TABLE 4.55: Nishat (Chunian) Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 4291.2 6688.7 5497.4 6550.8 7659.3 9138.3

COST OF SALES 3548.9 5719.8 4272.2 5382.3 6702.1 8097.4



INVENTORY 532.5 688.7 1330.4 1572.8 1799.9 2447.5





TOTAL ASSETS 3062.6 4358.6 8247.7 9465.1 9755.3 10838.1


TABLE 4.56: Nishat Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 13484.4 15617.3 11572.1 16661.4 17153.2 19267.6

COST OF SALES 11595.4 13683.3 9437.3 13945.7 14308.3 16298.9



INVENTORY 1905.3 1517.1 3322.2 3003.2 3106.4 4103.6



CURRENT RATIO IN %AGE 121.3 130.4 190 291.7 376.4 232.6

SALES GROWTH IN %AGE 10.4 15.8 -25.9 44 3 12.3

TOTAL ASSETS 15372 18171.9 21031 31179.5 39380.6 37916.6




83

TABLE 4.57: Quetta Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3338.7 4115.1 2859.9 4735.9 5093.4 6015.5

COST OF SALES 3090.9 3865.7 2608 4339.9 4592.9 5421.7



INVENTORY 389 646.6 1109 1210.4 1104 2074.6





TOTAL ASSETS 2465.5 3169.5 4389.8 5177.6 5661.1 7513.3


TABLE 4.58: Reliance Weaving Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2268.6 2781.6 2077.6 3150.6 3401 3509.6

COST OF SALES 1979.2 2493.8 1819.8 2728 3054.6 3193.8

RETURN ON ASSETS IN %AGE 5.8 6.1 3.3 4.3 1.4 -2


INVENTORY 429 557 787 746.6 772.4 1343.1





TOTAL ASSETS 1889.3 2045.4 3392.7 3345.3 3429 4119.1




84

TABLE 4.59: Saif Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1357.9 1943.6 2223.7 3473.3 3813 4489.2

COST OF SALES 1216.7 1781.4 2033.8 3127.1 3423.6 4048.8

RETURN ON ASSETS IN %AGE 3.5 2.1 1.2 1.5 -0.5 -1.9

OPERATING PROFIT 94.2 100 132 264 239.1 235.5

INVENTORY 524.6 600.4 797.4 955.6 933.6 911.5

RECEIVABLES AS % OF SALES 12.1 11.5 15.9 11 19.2 2




TOTAL ASSETS 1701.7 2744.9 3045.9 3586.1 4181.5 4292.5


TABLE 4.60: Sapphire Fibres Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3522.1 4350.3 3369.6 3369.6 5417.9 6511.5

COST OF SALES 3142.7 3966.4 2941.5 4222.4 4689 5420.6

RETURN ON ASSETS IN %AGE 7.2 5.9 4.9 4 5 11.5

OPERATING PROFIT 350 340.3 395.1 581.8 850.2 1858

INVENTORY 548.9 807 1489.2 1291 1322.7 2082.3


CURRENT LIABILITIES 1380.4 1531.6 2248.7 2474 2742.5 3572.3



TOTAL ASSETS 3668.3 4345.8 5717 8009 10999.1 12352.9




85

TABLE 4.61: Sapphire Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 5968.5 7796.6 5560.2 8270.2 9124.8 9746.7

COST OF SALES 5397.1 7426.6 4955.9 7505.4 8289.6 8618.6



INVENTORY 831.9 1249.6 1860.9 1908.7 1949.1 3278.7





TOTAL ASSETS 4984.1 5800.6 7314.4 9215.6 11124.1 12323.3

TOTAL LIABILITIES 2608.9 3386.5 4194 5324.4 5107 6746.8

TABLE 4.62: Suraj Cotton Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2144 3389.6 2608 3721.7 4128.2 4130.3

COST OF SALES 1896.9 3153.8 2300.1 3301.1 3701.9 3728.4



INVENTORY 472 171.9 473 367.3 404.4 886




SALES GROWTH IN %AGE -6.5 58.1 -23.1 42.7 10.9 0.1

TOTAL ASSETS 1973.5 2518.6 2636.5 3438.6 3580 3708.4




86

TABLE 4.63: The Crescent Textile Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 4742.7 5723.7 4298.1 5097.6 5591.6 8861.4

COST OF SALES 4150.6 5224 3757.4 4573.3 5062.3 8027.5

RETURN ON ASSETS IN %AGE 3.3 1.4 1.8 -0.2 1.1 -0.1


INVENTORY 711.2 3674.8 1172.3 962.7 978.3 1240.7





TOTAL ASSETS 5989.1 6849.8 7220.6 7131.8 10251.1 10851.9


TABLE 4.64: Al-Abid Silk Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3124.5 2846.1 3539.9 4454.9 4584.9 5495.6

COST OF SALES 2662.9 2434.7 3008.4 3732.9 3987.6 4813.6



INVENTORY 1306.1 1647.7 2532.1 2827.8 3151.3 4313.9


CURRENT LIABILITIES 1971.9 2255.4 3265 3707 4225.8 5254.7



TOTAL ASSETS 2830.5 3441.3 5177.4 5394.1 5748.1 7056.4




87

TABLE 4.65: Dewan Salman Fibre Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 18660.9 21122.3 19470.9 16732.6 15021.5 10762.2

COST OF SALES 17222.6 19448.5 18378.8 15702 14749.4 13253.4

RETURN ON ASSETS IN %AGE 0.5 2 0.1 -0.4 -4.9 -23.2

OPERATING PROFIT 1080.4 1099.4 607.1 548.8 -23.5 -3024.6

INVENTORY 4054.4 6239.6 7837.1 6844 6634.5 4683.6





TOTAL ASSETS 18437.6 19705 20352.3 24767.2 23545.7 21472.8


TABLE 4.66: Gatron (Industries) Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 5128.8 5918.4 5664.1 4839.9 6209.2 7056.5

COST OF SALES 4512.2 5326 5150.4 4488 5684.2 6271.2



INVENTORY 1157.3 1441.1 1710.6 1662.4 1484.4 1719.4




SALES GROWTH IN %AGE -0.2 15.4 -4.3 -14.6 28.3 13.6

TOTAL ASSETS 4285.3 4577.9 5256.9 5226.9 5245.2 5868.8




88

TABLE 4.67: Ibrahim Fibres Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 13624 19286.8 11686.2 17216.5 16330.4 21557.3

COST OF SALES 12434 17483.6 10747.3 15270.5 14699.9 19370.6



INVENTORY 1868.1 2559.2 3424.6 1629.9 2495.3 4173.3




SALES GROWTH IN %AGE 82.5 41.6 -39.4 47.3 -5.1 32

TOTAL ASSETS 11330.5 18680.6 19066.3 18748.3 20650.1 23842

TOTAL LIABILITIES 5490.1 12418 12267.2 10995.9 11552 14295.7

TABLE 4.68: Liberty Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2852.1 2820.4 3126.8 3783.8 4428.2 4602.1

COST OF SALES 2468.5 2431.8 2685.8 3265.3 3790.3 3839.2

RETURN ON ASSETS IN %AGE 10.9 10.3 9.2 9 11 11.4


INVENTORY 202 313.4 504.7 558.3 596.3 748.5




SALES GROWTH IN %AGE 65.8 -1.1 10.9 21 17 3.9

TOTAL ASSETS 1774.9 1930.3 2453.3 2714.1 2978.4 3322.1




89

TABLE 4.69: Rupali Polyester Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3055.9 3794.1 4138.1 3538 4130.7 4241

COST OF SALES 2808.1 3452.3 3867.2 3365.2 3925.6 3982.8



INVENTORY 482.8 756.5 899 978.2 774.4 881.3




SALES GROWTH IN %AGE 5.3 24.2 9.1 -14.5 16.8 2.7

TOTAL ASSETS 2199.6 2247.2 2353.6 2404.3 2726.9 2931.3


TABLE 4.70: Abbott Laboratories (Pakistan) Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 4435.9 4814.9 5346.5 6103.8 6838.6 7377.7

COST OF SALES 2753.9 2829.5 3050.4 3625.2 4104.7 5280



INVENTORY 757.9 917.6 1217.9 1256.1 1363.5 1696.2


CURRENT LIABILITIES 692 520.5 652 793.5 992.1 1447.4


SALES GROWTH IN %AGE 3.8 8.5 11 14.2 12 7.9

TOTAL ASSETS 2957.9 3368.7 4129 5035.3 4681.3 5015.9

TOTAL LIABILITIES 692 520.5 652 793.5 992.1 1447.4



90

TABLE 4.71: Berger Paints Pakistan Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1060.3 1345.3 2242.7 2999.7 3620.5 3988.3

COST OF SALES 785.1 1011.3 1726.5 2240.1 2839.2 3345.2


OPERATING PROFIT 70.9 76.9 116.1 213 210.7 -92.8

INVENTORY 178.4 262.2 430.9 454.4 570.9 873.3





TOTAL ASSETS 639.4 912 1381 1755 2100 2863.8


TABLE 4.72: Clariant Pakistan Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 4340.1 5025.9 5543.4 5582.1 6335.1 7723.1

COST OF SALES 3446.2 4129.4 4405.6 4595.5 5000.1 5921.3



INVENTORY 782.3 964.1 1222.7 1170.4 1307.1 1509.3





TOTAL ASSETS 2634.4 2941.9 3426.8 3597.2 4256.3 4726.5




91

TABLE 4.73: Colgate-Palmolive (Pakistan) Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3461.6 4195.2 4883.3 6286.4 7445.8 8976.5

COST OF SALES 2704.3 3233.2 3824.9 4671.1 5566.1 6879.7

RETURN ON ASSETS IN %AGE 26.5 31 31 36.8 34.1 32.7


INVENTORY 335.7 432.8 536.7 614.3 777.9 1006.4

RECEIVABLES AS % OF SALES 2.8 0 1.7 1.7 1.9 2




TOTAL ASSETS 1020.1 1409.1 1508.7 2088.3 2633.1 3126.8


TABLE 4.74: Dawood Hercules Chemicals Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3432.6 3087.3 3712.2 4333.9 5543.5 7665.2

COST OF SALES 2372.5 2269.5 2452.2 3022.4 3681 4549

RETURN ON ASSETS IN %AGE 18.6 9.4 27.9 16 38.1 8


INVENTORY 103.6 68.2 164.4 237.3 867.5 89.6



CURRENT RATIO IN %AGE 323 308.9 358.4 215 726.5 293.8


TOTAL ASSETS 9043.9 14142 12787.1 16162.8 29222.7 25630.1




92

TABLE 4.75: Engro Chemical Pakistan Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 12299.2 13067.7 18756.8 19072.2 36625.8 43242.6

COST OF SALES 8067 9331.1 14072.8 14835 28643.5 32380.9


OPERATING PROFIT 3081.8 3099.1 3552 3807.2 4670.5 6922

INVENTORY 385.6 484.7 1923 923.4 2690.2 4680.9




SALES GROWTH IN %AGE -0.7 6.2 43.5 1.7 92 18.1

TOTAL ASSETS 12820.2 13175.3 14090.1 15962.7 38022.8 60165.7


TABLE 4.76: Fauji Fertilizer Bin Qasim Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 6014 12532.8 15277.2 15777.6 13167.1 27410.8

COST OF SALES 4850.3 9272 10714.7 11093.4 8344.6 19184.7



INVENTORY 209.5 252.3 1023 800.5 587.9 5676.7





TOTAL ASSETS 18156.8 21966.9 24581.5 27681.3 29046 46771.6




93

TABLE 4.77: Fauji Fertilizer Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 30207.4 39946.4 43481.9 48595.9 40688.8 57433.7

COST OF SALES 22874.1 28800.1 29799.3 34180.2 25731.8 36829.4



INVENTORY 681.3 219.2 560.5 952.9 642.8 258.1





TOTAL ASSETS 25213.8 24664.7 26775.3 25861.1 27672 30349.7


TABLE 4.78: Glaxosmithkline (Pakistan) Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 8202.6 8993.8 9554.1 10240.1 10784.8 13687

COST OF SALES 5042.9 5488.1 5707.7 6373.4 6832.7 9831.5


OPERATING PROFIT 1557.3 2148 2707.7 2651.2 2670 3077.8

INVENTORY 1605 1632.3 1973 2195.4 2277.2 3494.1





TOTAL ASSETS 5894.8 6865.2 8260.5 9443.8 10164.5 10625.8




94

TABLE 4.79: ICI Pakistan Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 22107.2 21243.5 21054.3 21885.3 25973 31921.9

COST OF SALES 19424.9 18434.6 17852 17934.1 21308.9 26381.3

RETURN ON ASSETS IN %AGE -4.8 33.7 11 11.7 13.9 15.9


INVENTORY 2046.3 2923.7 2511.5 2347.8 2311.3 2952

RECEIVABLES AS % OF SALES 2.9 4 3.1 3.3 4 3.1



SALES GROWTH IN %AGE 46.7 -3.9 -0.9 3.9 18.7 22.9

TOTAL ASSETS 13326 13861.2 14635.9 16857.9 18766.5 18660.1


TABLE 4.80: Pakistan PTA Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 20629.5 26953.2 28424.9 30815.4 31535.5 35975.2

COST OF SALES 20095.7 23640.2 25754.3 28579 30185.5 35106.9

RETURN ON ASSETS IN %AGE -29.5 7.2 8.1 2 1.2 -11


INVENTORY 1963.9 4030.6 2835.6 3703.1 2344.6 1244.3





TOTAL ASSETS 19751.2 19377.9 17426.6 17915.8 17314.9 15222.9




95

TABLE 4.81: Sanofi Aventis (Aventis Pharma)

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3057.7 3351.4 3684 4150.2 4203.6 4676.5

COST OF SALES 2203.5 2366.7 2519.8 2885.9 3117.6 3620.7



INVENTORY 527.5 596.3 1074 797.3 1077 1104.9





TOTAL ASSETS 1597.3 1483.9 2121.2 1988 2427.1 2983.5


TABLE 4.82: Searle Pakistan Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1923.8 2026.7 2473.2 3240.5 3114.5 3253.4

COST OF SALES 1350.6 1355.7 1813.9 2289.4 2155.7 2287.5



INVENTORY 124.3 208.2 216.2 239.6 385.6 223.5




SALES GROWTH IN %AGE 0.5 5.3 22 31 -3.9 4.5

TOTAL ASSETS 1409.7 1884 1895.5 2322.6 2459.3 2279.1




96

TABLE 4.83: Sitara Chemical Industries Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3224.8 3566.7 4584.4 4383.3 5043 6355.4

COST OF SALES 2712.8 2936.7 3684 3678.2 3958.7 4800.1



INVENTORY 229.8 347.6 319.1 407 441.7 526.9




SALES GROWTH IN %AGE 8.5 10.6 28.5 -4.4 15.1 26

TOTAL ASSETS 2871.9 3051.4 3622.1 5370.4 6384.6 8793.4


TABLE 4.84: Al-Ghazi Tractors Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 5537.2 6836.4 7851.6 9148.3 9209.5 10241.9

COST OF SALES 4030.5 5237.9 6249.1 7513.2 7556 8664.1



INVENTORY 378.7 648 740.1 731 708.7 1931.4





TOTAL ASSETS 3042.7 4180.2 7245.4 7278.3 6827.3 7086.1




97

TABLE 4.85: Atlas Honda Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 8064.1 11460.6 16855.2 20547.2 19601.1 24301.7

COST OF SALES 7036.3 10226.4 15511 18917.5 18037.3 22745.2



INVENTORY 557.3 1285 1567.5 1937.7 1580.9 1862.1




SALES GROWTH IN %AGE 26.8 42.1 47.1 21.9 -4.6 24

TOTAL ASSETS 2655.3 4110.4 6072.5 7601.1 8012.3 8689.8


TABLE 4.86: Crescent Steel & Allied Products Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1738.9 1543.9 3080.2 1859.3 3184.8 4638.2

COST OF SALES 1398 1374.4 2708.3 1718.9 2674.3 3741.8



INVENTORY 205 240.5 194.3 468.5 633.5 606.1




SALES GROWTH IN %AGE 34.4 -11.2 99.5 -39.6 71.3 45.6

TOTAL ASSETS 1459.5 2225.4 2532 3713.7 4695.6 4846.1




98

TABLE 4.87: Dewan Farooque Motors Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 5534.7 7685.8 10294.2 10636.1 8576.8 6327.6

COST OF SALES 4902.1 6980 9241.2 9535.6 7710.3 6174.6

RETURN ON ASSETS IN %AGE 6 6.5 8.1 4.1 1.4 -9.9

OPERATING PROFIT 409.5 407.3 648.5 608.6 481.2 -262.4

INVENTORY 815.5 1930.8 1837.3 2519.2 1567.6 1234.2

RECEIVABLES AS % OF SALES 2.7 3.1 2.3 7 11 4.7

CURRENT LIABILITIES 2194 3948.3 4435.8 5356.1 4836 4091.2


SALES GROWTH IN %AGE 11.8 38.9 33.9 3.3 -19.4 -26.2

TOTAL ASSETS 3474.8 5102.9 6312.1 7704.6 6887.1 5852.6


TABLE 4.88: General Tyre & Rubber Co. Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2605 3266.7 3697.7 4323.1 4605.7 5422.3

COST OF SALES 2074.9 2640.1 3114.2 3801.6 4137.8 4912



INVENTORY 517.9 655.2 880.2 1012.7 907.2 1051.8





TOTAL ASSETS 1665.2 1970.9 2702.7 3393 3516 4009.1

TOTAL LIABILITIES 761 786 1300.7 1946.5 2277.6 2787.1



99

TABLE 4.89: Ghandhara Nissan Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 97.4 1187 4072.5 5185.3 3019.1 3924.6

COST OF SALES 127.5 1056.5 3690.9 4565.1 2522.4 3402.8



INVENTORY 47.5 483.1 1323.1 1346 772.8 789.7




SALES GROWTH IN %AGE 23.1 1118.7 243.1 27.3 -41.8 30

TOTAL ASSETS 547.2 1715.7 2658.9 2860.4 2398.2 3101.1


TABLE 4.90: Hinopak Motors Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 4290.9 6337.4 7395.2 7200.4 8159.2 12630.7

COST OF SALES 3507.6 5567.4 6718.1 6365.8 6771.6 11379.5


OPERATING PROFIT 553 509.3 435 560.2 967.7 794.3

INVENTORY 1277.2 1779.4 1790.7 2381.3 2533.2 2398.6

RECEIVABLES AS % OF SALES 12.8 3.9 4.4 7 10 9




TOTAL ASSETS 3002.2 3414.3 3164.6 4141.9 4908.3 5001.5




100

TABLE 4.91: Honda Atlas Cars (Pakistan) Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 5035.6 9610.4 17038.9 30236.1 20106.3 17430.8

COST OF SALES 4468.2 8854.4 16755.9 29068.6 20006.4 16803.3

RETURN ON ASSETS IN %AGE 16.2 8.9 2.2 12.4 -5.8 0.9

OPERATING PROFIT 476.3 622.5 264.6 1180.1 -176.2 297.3

INVENTORY 940.9 1708.5 3159.2 4169.1 2704.9 1612.7

RECEIVABLES AS % OF SALES 0 0 0 0 0 0



SALES GROWTH IN %AGE -24.9 90.8 77.3 77.5 -33.5 -13.3

TOTAL ASSETS 2941.5 6965.5 11776.9 9141.1 8239.2 6752.2


TABLE 4.92: Indus Motor Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 16113.3 23193.7 32717.7 41787.6 46384.5 49425.3

COST OF SALES 13966.6 20500 30011.5 37640 41943.9 45576.8



INVENTORY 1802.3 2537.2 3168.9 3959.3 2860 2637.6




SALES GROWTH IN %AGE 93.3 43.9 41.1 27.7 11 6.6

TOTAL ASSETS 11069.3 11556.4 12184 15816.4 15661.6 13748.1




101

TABLE 4.93: International Industries Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3797.6 4987.5 8089.4 8727 11020.2 13761.5

COST OF SALES 3289.2 4197.8 7220.3 7486.5 9597.2 11974.1



INVENTORY 1134.8 2116.5 2583.8 2025.9 3309.9 4591.6




SALES GROWTH IN %AGE 26 31.3 62.2 7.9 26.3 24.9

TOTAL ASSETS 2808.8 4243.8 4932.1 5242.4 8594.7 10615.8


TABLE 4.94: Millat Tractors Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 5342.6 7036.2 8427.7 9876.7 11142.5 11432.5

COST OF SALES 4690.2 6188.9 7504.7 8709.3 10002.3 9928.5



INVENTORY 810.4 1402.5 2314.5 2283.9 1840.1 1636.2





TOTAL ASSETS 2617.4 3552.3 6322.8 7445.2 6247.9 7250.9




102

TABLE 4.95: Pak Elektron Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3943.1 6078.2 8075.3 11042.2 13077.7 13926.6

COST OF SALES 3124.2 5016.1 6586 8994.5 10547.8 11089.2



INVENTORY 535.2 1309.1 1956.6 2576 2507.7 3571.2

RECEIVABLES AS % OF SALES 19 16.1 23 23.7 22.5 30.2

CURRENT LIABILITIES 2556.8 3512.9 4714.7 6528 5981 8126.8



TOTAL ASSETS 5071.8 6483.2 7761.9 9505.2 10965.2 15821.2


TABLE 4.96: Pak Suzuki Motor Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 18852.1 28670.9 41381.3 47187.9 60747.8 48240.7

COST OF SALES 16208.6 26254.3 37808.4 41627.2 55987.6 47650.1


OPERATING PROFIT 2418.9 2179.8 3636 5359.5 4425 1045.6

INVENTORY 2258.4 3765.3 4968.1 9232.7 9184.4 7732.5




SALES GROWTH IN %AGE 68.1 52.1 44.3 14 28.7 -20.6

TOTAL ASSETS 9503.8 13435 18624.4 21817.5 20814.7 16572.2




103

TABLE 4.97: Pakistan Cables Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 964.7 1287.2 2333.9 3492.2 4810.8 4442.6

COST OF SALES 823 1102.9 2014.4 2997.1 4196.6 4072.7



INVENTORY 276.4 499.3 723.9 984.4 1133.4 1018.6





TOTAL ASSETS 563.5 833 1812.7 2718.3 2979.1 3345.9


TABLE 4.98: Siemens (Pakistan) Engineering Co. Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 5899.7 7573 13374.5 20998.2 22238.9 27236.5

COST OF SALES 4897.7 6320.9 11609.9 18546.4 19113.8 23222.6



INVENTORY 1585.5 0 2337.5 2285.2 3166.7 4588.7




SALES GROWTH IN %AGE 21.6 28.4 76.6 57 5.9 22.5

TOTAL ASSETS 4245.4 4947.2 7834.2 12021.9 17574.2 24769.3




104

TABLE 4.99: Dewan Sugar Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1811.5 857.7 3307.4 7262.9 4854.5 6200.5

COST OF SALES 1801.2 716.7 3099.3 6778 4702.3 6158.1

RETURN ON ASSETS IN %AGE -2.8 1.7 0.9 1.9 -5 -10.7

OPERATING PROFIT 73.7 146.3 150.9 359.9 11.8 -113.5

INVENTORY 390.8 898.7 1797.2 577.5 862.1 828




SALES GROWTH IN %AGE 62.6 -52.7 285.6 119.6 -33.2 27.7

TOTAL ASSETS 2318 4284.5 6605.9 7026.6 7069 6897.5


TABLE 4.100: Habib Sugar Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 984.4 2252.3 3072 4019.3 2839 4490.4

COST OF SALES 931.3 1950.5 2777.6 3601.8 2468.8 3755.7



INVENTORY 355.2 303.8 531.9 419.3 390.5 438.2




SALES GROWTH IN %AGE -36.5 128.8 36.4 30.8 -29.4 58.2

TOTAL ASSETS 1570.1 1809.6 2019.3 2395.7 2939.4 3354.4




105

TABLE 4.101: JDW Sugar Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1926 2057.5 3194.3 6489.8 6144.7 12393.9

COST OF SALES 1628.6 1639.3 2549.2 5336.8 5328.3 10411

RETURN ON ASSETS IN %AGE 12.7 10.8 10 5.5 0.8 10


INVENTORY 0 33.7 0 0 358.2 598.6





TOTAL ASSETS 1247.6 2502.1 3634.9 5178.9 7243.4 7942.2


TABLE 4.102: Shakarganj Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2414.8 3983.8 5631.4 6014 7006.4 8807.7

COST OF SALES 2139.5 3603.3 5150 5747.4 6789.5 8103.6

RETURN ON ASSETS IN %AGE 6 3.5 1.8 -2.4 8.3 -7.9


INVENTORY 587.5 464.6 941.5 1823.8 1069.9 120.3




SALES GROWTH IN %AGE -20 65 41.4 6.8 16.5 25.7

TOTAL ASSETS 2606 6187.3 10130.9 11718.8 10909.1 12404.8




106

TABLE 4.103: Century Paper & Board Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2777.9 3013.5 3452.8 3843.9 4415.5 5036.3

COST OF SALES 2280 2586.7 2961 3385.3 4109.9 4717.9



INVENTORY 204.6 262.4 335.1 424.9 455.9 1496.5


CURRENT LIABILITIES 391.1 829 827.8 1177 3151.9 4948.4



TOTAL ASSETS 2027.1 2265.2 2843.7 4438.3 9630.9 13376.9


TABLE 4.104: Packages Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 6861.1 6893 8163 9998.6 11686.4 14300.9

COST OF SALES 5499.4 5584.4 6810.1 8428.9 10180.6 13357.6



INVENTORY 844.1 1364.7 1144 1647.2 2206.2 3652.3





TOTAL ASSETS 6126.3 7636.5 11615.1 22671 33438.1 35034.4




107

TABLE 4.105: Bestway Cement Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2993.2 3801.2 4905.9 6131.1 8409.4 10669.6

COST OF SALES 2535 2730.8 3356.9 3837.6 7396.6 9661.3


OPERATING PROFIT 429 1068.9 1437.6 2199.1 1268 817.1

INVENTORY 155.6 113.1 93.4 150.3 290.8 729.7

RECEIVABLES AS % OF SALES 0 1.1 0 0.5 1 3.4



SALES GROWTH IN %AGE 5.8 27 29.1 25 37.2 26.9

TOTAL ASSETS 6561.1 5988.4 9023.9 18018.1 23081.4 25415.5

TOTAL LIABILITIES 4364 3307.9 5410.3 13168 17100.3 18559

TABLE 4.106: Cherat Cement Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2373.3 2466.8 3205.5 3010.6 3448.8 3881

COST OF SALES 2223.1 1751.6 2349.1 2064.9 3071.1 3701.6

RETURN ON ASSETS IN %AGE 1.3 26.3 21.4 19.9 7 -1.3


INVENTORY 48.9 79.9 88.5 145.2 117.3 207.5

RECEIVABLES AS % OF SALES 0 0 0.1 0 0.1 0




TOTAL ASSETS 1907.7 2182 3202.8 3611.8 3533.4 4382.2




108

TABLE 4.107: D.G. Khan Cement Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 5149.6 5697.6 7372.2 10955.9 9399.1 17473.5

COST OF SALES 4472 4312.1 5423.3 6993.1 7367.1 15537.3



INVENTORY 186 298.5 101 226.3 295.1 445.9

RECEIVABLES AS % OF SALES 0 0 1 0.7 1.5 2.1




TOTAL ASSETS 9511.5 11714.6 18016.5 34304.5 51744.4 51993


TABLE 4.108: Dewan Cement Ltd. (Pakland Cement Ltd.)

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1738.6 2032.9 2757 3760.3 6307.3 6588.4

COST OF SALES 1556.5 2015.9 2417.6 3016.9 5696.8 6696.7

RETURN ON ASSETS IN %AGE 0.8 -4.4 1.6 5.8 0.7 -2.7

OPERATING PROFIT 112.3 -270.2 350.6 741.9 718.1 -257.2

INVENTORY 26.4 28.9 132.3 186.7 302.8 127.8





TOTAL ASSETS 8642.7 6551.6 7241.5 8231.9 22159 21611.1




109

TABLE 4.109: Fauji Cement Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2489 3247.3 3921.3 5683.4 4780 4749.2

COST OF SALES 2313.4 2506.4 2839.8 3492.3 3688.5 4091.1

RETURN ON ASSETS IN %AGE -9.4 -4.1 12.2 28.7 12.3 3.6

OPERATING PROFIT -60.4 -39 988.6 2041.9 995.3 601.5

INVENTORY 48 61.6 55.9 145.1 183.3 230.1




SALES GROWTH IN %AGE -3.3 30.5 20.8 44.9 -15.9 -0.6

TOTAL ASSETS 5551.1 5910.4 6223.7 6198.1 6400.7 12454.5


TABLE 4.110: Fecto Cement Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1847.8 2056.3 2595.2 3375.6 3183.3 3352.7

COST OF SALES 1827.6 1785 2133.9 2574.7 2974.8 3161.6

RETURN ON ASSETS IN %AGE -9 11 20 32.4 1.4 -5.3


INVENTORY 73.1 37.2 103.4 25.4 78.1 115.7





TOTAL ASSETS 1319.3 1241.7 1490.7 1968.9 2082.9 2229.7




110

TABLE 4.111: Lucky Cement Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3808.8 4270 5566.4 10707.9 16623.4 20819.8

COST OF SALES 3361.1 3169.5 4186.8 7797.2 12948.2 16457



INVENTORY 115.1 172.3 115.8 431.4 676.3 709.4





TOTAL ASSETS 4818 7040 14806.9 23622.8 25723.8 34239.1


TABLE 4.112: Maple Leaf Cement Factory Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 4025.3 4967.5 6193.4 7954.9 5514.2 10552.4

COST OF SALES 3663.7 3819.2 4865.5 5806.3 5204.3 9228.6

RETURN ON ASSETS IN %AGE -1.3 10.6 9.9 8.7 -0.6 -5.2

OPERATING PROFIT 335 1062.4 1233 1975.8 198.4 448.6

INVENTORY 98.2 100.1 183.2 200.9 369.7 434




SALES GROWTH IN %AGE -4.9 23.4 24.7 28.4 -30.7 91.4

TOTAL ASSETS 7064.4 7087.6 10419.4 18793.3 23432.5 26136.5




111

TABLE 4.113: Pioneer Cement Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1797.8 1958.3 2800.1 4153.6 4648.7 6607.5

COST OF SALES 1683.6 1571.7 2127 2922.9 4330.5 6093.8

RETURN ON ASSETS IN %AGE -3.8 5.6 5.7 11.1 -2.1 -5.5

OPERATING PROFIT 45 355.6 514.7 1130.1 181.4 -160.8

INVENTORY 48.5 50.8 56.8 96.8 150.3 68.7




SALES GROWTH IN %AGE 10.2 8.9 43 48.3 11.9 42.1

TOTAL ASSETS 3948.3 4274.7 6887.8 8405 8610.5 10472.7


TABLE 4.114: Attock Refinery Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 27200.9 29512.2 47493.4 70001.3 74316.6 93654.3

COST OF SALES 26596.8 28580.6 44944.2 69429.6 73462.6 89646.4



INVENTORY 1188.3 1738.6 2100.6 3523.8 3852.6 4844.9




SALES GROWTH IN %AGE 10.5 8.5 60.9 47.4 6.2 26

TOTAL ASSETS 9662 12354.2 18367.8 29096.3 32187.8 50081.3




112

TABLE 4.115: Japan Power Generation Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2272.8 2019.9 2194.8 3517 4018.2 4499.1

COST OF SALES 1859.3 1636 1818.8 3155.5 3739.8 4214.1



INVENTORY 53.4 56 70 208.9 93.2 131.7




SALES GROWTH IN %AGE 16 -11.1 8.7 60.2 14.3 12

TOTAL ASSETS 6536.4 6313.8 6233.8 7137.6 6997.3 7116.1


TABLE 4.116: Karachi Electric Supply Corporation Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 35620.3 36721.3 38603.2 41617.7 44859.5 49808.5

COST OF SALES 45101.7 41194.5 46978 52034.7 51960.7 51462.4

RETURN ON ASSETS IN %AGE -12.5 2 -19.8 -10.8 -15.5 -16.9

OPERATING PROFIT -6274.6 1894.6 -11881 -6828.8 -10805 -13877

INVENTORY 0 0 0 0 4668.1 0




SALES GROWTH IN %AGE 18.7 3.1 0 7.8 7.8 11

TOTAL ASSETS 64970.7 62505.8 60038.8 65531.4 77321 93043.7




113

TABLE 4.117: Kohinoor Energy Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2545.9 2477.4 2918.6 5506.1 5333.1 7387.9

COST OF SALES 1506.9 1406.1 1879 4271.5 4180.6 6432.2

RETURN ON ASSETS IN %AGE 10 12.1 12 15.2 11.7 9


INVENTORY 120 121.1 130.7 144.6 209.4 85.6




SALES GROWTH IN %AGE 49.9 -2.7 17.8 88.7 -3.1 38.5

TOTAL ASSETS 7142 6854.6 6765.9 6728.4 7187 7348.8


TABLE 4.118: Mari Gas Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 12482.5 14257.3 15937.1 19651.9 22211.1 21566.3

COST OF SALES 10350.5 11839.5 13579.9 17191.7 18993.7 15706.3




RECEIVABLES AS % OF SALES 7 6 6 6.2 6.6 11



SALES GROWTH IN %AGE 10 14.2 11.8 23.3 13 -2.9

TOTAL ASSETS 6727.9 7058.9 6637.4 8147.6 8602.4 9278.5




114

TABLE 4.119: National Refinery Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 41327 46265.6 69141.5 96635 109146 146233

COST OF SALES 39245.1 43309.1 65305.5 91636.2 102882 135553



INVENTORY 2802.1 3639.9 3205.9 6475.2 7687.4 13288.3




SALES GROWTH IN %AGE 21.5 12 49.4 39.8 12.9 34

TOTAL ASSETS 12568.9 16883.5 18411.3 24912 32623.5 46592.7


TABLE 4.120: Pakistan Oilfields Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 7670.2 7753.8 10081 17732.1 16331.1 18722.4

COST OF SALES 4332.9 4732.4 4690 9143.4 7794.6 8087.5


OPERATING PROFIT 3573 3361.1 4951.7 8505.6 8448.6 9965.7

INVENTORY 14.7 20.7 30.2 62.8 69.2 57.6




SALES GROWTH IN %AGE 5.4 1.1 30 75.9 -7.9 14.6

TOTAL ASSETS 10734 12703.5 15840 23241.2 25020.4 32867.9




115

TABLE 4.121: Pakistan Refinery Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 28516.7 28670.4 44442.1 71991.2 67385.9 107301

COST OF SALES 27111.6 27357.3 41505.3 69589.7 66610 102969



INVENTORY 1691.3 2441.4 2040.9 3843.6 5107.8 9102.1




SALES GROWTH IN %AGE 4.7 0.5 55 62 -6.4 59.2

TOTAL ASSETS 4796.6 6189.1 7656.4 12004.3 14665.1 23758


TABLE 4.122: Pakistan State Oil Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 206376 195110 254363 353833 411990 583214

COST OF SALES 197421 185939 240617 336626 399731 553190



INVENTORY 8310.9 14970.6 20583.3 28168.6 29562.1 62360.1


CURRENT LIABILITIES 18410.6 27225.7 33442 49355.4 53798.1 96145



TOTAL ASSETS 32254 42291.4 51933.9 70013.7 74611.2 127005

TOTAL LIABILITIES 18415.4 27225.7 33442 49355.4 53798.1 96145



116

TABLE 4.123: Shell Pakistan Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 89448.5 90663.5 112043 133637 131040 159067

COST OF SALES 83675.2 84456.3 103201 124233 125267 143917



INVENTORY 2827 4537 6608.2 9979.9 8244.1 18095.5





TOTAL ASSETS 12945.5 15344.1 20323.1 28134 29192.7 39654.4


TABLE 4.124: Southern Electric Power Co. Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2555 2261.3 2798.1 4240.6 4415.6 3989.3

COST OF SALES 1722.2 1586.2 2319.2 3691.2 4163.2 3712.1

RETURN ON ASSETS IN %AGE 4 3.2 0.8 0.5 -3.8 -3.7


INVENTORY 106.5 81.2 156.1 55.3 75.4 34.7




SALES GROWTH IN %AGE 16.4 -11.5 23.7 51.6 4.1 -9.7

TOTAL ASSETS 7586.8 7341.3 7509.4 7705.1 7797.5 7964.1




117

TABLE 4.125: Sui Northern Gas Pipelines Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 45649.5 74005.6 97487.7 107897 137187 124155

COST OF SALES 34538.8 62427.1 85302.7 94032.5 123779 109108



INVENTORY 184.2 275.8 346.4 445.8 473.4 525.4





TOTAL ASSETS 47300.5 56924.7 65076.4 77229.9 83633.1 97618.2


TABLE 4.126: Sui Southern Gas Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 41572.3 54444.6 62511.7 77562.3 85716.7 86829.3

COST OF SALES 34796.5 48358 56621.7 70853.1 79789.4 79425.2



INVENTORY 219.2 198.4 227.3 281.4 368.9 512.4




SALES GROWTH IN %AGE 12.2 31 14.8 24.1 10.5 1.3

TOTAL ASSETS 30235.8 31836.8 37621.5 47023.4 61857.7 71633.4




118

TABLE 4.127: The Hub Power Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 19513.7 16678.1 17909.5 30915.7 49575 70428.6

COST OF SALES 11022 8781.9 10752.5 26557.3 45411.2 65678.7



INVENTORY 1268.2 1513.8 1251 1890.9 2563.8 1564.2





TOTAL ASSETS 55546 51772.8 46628 43509.9 44988.4 62694.3

TOTAL LIABILITIES 29515.3 22125.2 14959 13530.2 15941.3 34226

TABLE 4.128: Pakistan International Airlines Co. Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 47951.8 57788.1 64074.5 76435.2 70480.7 99171.7

COST OF SALES 31324.7 49053.8 58940.8 74723.3 66222 93269.2

RETURN ON ASSETS IN %AGE 6.5 1.1 -6.2 -12.2 -11 -28.1

OPERATING PROFIT 6274.4 3036.4 -1725.7 -7710 -5935.2 -30232

INVENTORY 0 0 0 0 3251.9 3726.9





TOTAL ASSETS 56565.6 78602.2 72785.1 106794 118670 139557

TOTAL LIABILITIES 47282.5 62849.4 59876.1 106754 129705 172179



119

TABLE 4.129: Pakistan National Shipping Corporation.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 5404.9 6963.1 7951 7924.6 9089.1 10753.5

COST OF SALES 4384.4 4571.3 4995.1 6255 6495.7 7277.1



INVENTORY 0 0 0 0 444.3 0





TOTAL ASSETS 5090.6 7455.3 14922.2 13591.4 16386.6 13612.8


TABLE 4.130: Pakistan Telecommunication Co. Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 78866.5 87986 84913.5 72684.4 86252 80835.9

COST OF SALES 32367.5 33824.1 18734.5 17370.1 37277.8 39727

RETURN ON ASSETS IN %AGE 28.3 29.6 31 20.9 17.2 -1.3


INVENTORY 0 17467 0 0 3879.2 190.9




SALES GROWTH IN %AGE 14.6 11.6 -3.5 -14.4 18.7 -6.3

TOTAL ASSETS 130604 150656 131612 148191 149590 187302




120

TABLE 4.131: Lakson Tobacco Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 15746.1 19624.1 23320.6 20619.7 22425.3 24937.9

COST OF SALES 12892 16394.2 19240.4 16443.2 17934.8 20621.5



INVENTORY 1650.8 1466.2 1104.2 2009.1 2463.2 5327.1




SALES GROWTH IN %AGE -3 24.6 18.8 -11.6 8.8 11.2

TOTAL ASSETS 3914.8 4951.9 5567.8 5918.6 6593.2 9439.8


TABLE 4.132: Pakistan Tobacco Company Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 22572.2 25452.6 30615.1 35715.5 40889.3 49053.9

COST OF SALES 19700.7 21970 26085.5 30181.9 34379.3 41777.2



INVENTORY 3227.5 3074.1 3780.9 3790.9 3998.2 4059.1

RECEIVABLES AS % OF SALES 0.6 0 0 0 0 0


CURRENT RATIO IN %AGE 89 92 96.3 91.5 80.5 70.7

SALES GROWTH IN %AGE 9.8 12.8 20.3 16.7 14.5 20

TOTAL ASSETS 7298.8 7024.8 7968.4 8734.5 9826.3 10395.1




121

TABLE 4.133: Thal Jute Mills Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2421.5 3066.2 4045.9 6006.4 6896 9861.8

COST OF SALES 1932.7 2540.4 3346.6 4852 5587.5 8436.7



INVENTORY 462.7 731 837.1 1609.5 1465.9 2012.3




SALES GROWTH IN %AGE 35.1 26.6 32 48.5 14.8 43

TOTAL ASSETS 1023.8 1334.5 1652.1 3213.4 3701.1 5635.4


TABLE 4.134: Bata Pakistan Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 2669.5 2722.3 2934.6 3309.6 4271.9 5521.1

COST OF SALES 1902.1 1886.5 1997.2 2196.8 2634.8 3357



INVENTORY 547.8 541.2 606.8 716.7 770 1274.3


CURRENT LIABILITIES 778.9 663 679.2 717.2 900 841.2


SALES GROWTH IN %AGE 19.7 2 7.8 12.8 29.1 29.2

TOTAL ASSETS 1283.5 1272.3 1363.9 1414.6 1873 2277

TOTAL LIABILITIES 778.9 663 679.2 717.2 900 841.2



122

TABLE 4.135: Ghani Glass Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 632.2 959.7 1617.8 3106 3594.4 4621.2

COST OF SALES 419.5 679.4 1258.6 2396.5 2817.3 3376.9



INVENTORY 62.2 246.9 256.1 462.6 550.8 658.1




SALES GROWTH IN %AGE 31.8 51.8 68.6 92 15.7 28.6

TOTAL ASSETS 676.3 1096.3 1381.6 3478.6 3975.6 4680.5


TABLE 4.136: National Foods Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1511.1 1742.4 2070.8 2465.4 3147.3 4042

COST OF SALES 1200.9 1358.2 1673.6 1894.2 2328.9 3056.3



INVENTORY 209 273.9 356.7 367.2 477 755.3



CURRENT RATIO IN %AGE 94 97.8 107 114.1 104.5 100.4


TOTAL ASSETS 464.1 561.4 704.5 963.9 1185.6 1744.5




123

TABLE 4.137: Nestlé Pakistan Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 10979.7 13599.4 18785.8 24062 30455.5 36129.6

COST OF SALES 7929.6 10003.6 14000.5 17809.4 22511.3 27177.3



INVENTORY 863.1 1693.8 1493 1907.3 2393.3 2488.6





TOTAL ASSETS 3840.3 5611.2 8659.2 12792.9 15756.1 16634.5


TABLE 4.138: Pakistan Services Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1977 2569.5 3829.8 4875.5 5679.6 5485.7

COST OF SALES 1363.4 1718.1 2684.9 3346.8 3805.6 3878.2



INVENTORY 21.5 29.1 28 35.2 29.2 45.7




SALES GROWTH IN %AGE 1.9 30 49 27.3 16.5 -3.4

TOTAL ASSETS 5601.3 6066.4 12408.6 12995.4 13330.5 14171.4




124

TABLE 4.139: Rafhan Maize Products Co. Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 4055.4 5078 5584.4 6360.9 7893.4 11250.8

COST OF SALES 3025.4 3827.2 4389.6 4789.8 5795.2 8509.6



INVENTORY 1005.3 1186.5 1378 1160.6 1361.8 2406.1




SALES GROWTH IN %AGE -8.3 25.2 10 13.9 24.1 42.5

TOTAL ASSETS 2503.8 3121.6 3491.2 3526.6 3945.5 5228.8


TABLE 4.140: Service Industries Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 3057.5 3279.3 3820.3 4152.4 4871.9 6877.3

COST OF SALES 2734.2 2949.1 3352 3572.4 4155.9 5839.2



INVENTORY 732.2 727.1 778.8 836.7 698.6 1182.6





TOTAL ASSETS 1972.4 2096.7 2327.5 2477.7 2450.7 3341.9




125

TABLE 4.141: Tri-Pack Films Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1791.7 2054.6 3391 4351 5386.1 7100.2

COST OF SALES 1394.8 1773.1 3041.4 3842.2 4458.4 6090.1



INVENTORY 165.9 433.8 313.9 277 640.8 950.4


CURRENT LIABILITIES 315.9 825.8 796.7 974.2 1549 2177


SALES GROWTH IN %AGE 16.3 14.7 65 28.3 23.8 31.8

TOTAL ASSETS 1292.4 2776 2757.9 2812.4 3341.7 4313.2

TOTAL LIABILITIES 453.4 1825.8 1768.7 1730.2 2089 3001

TABLE 4.142: Unilever Pakistan Foods Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 1953.3 1585.5 1824.3 2373.2 2917 3748.4

COST OF SALES 1494.1 1242 1298.7 1641.9 2028.6 2591.3

RETURN ON ASSETS IN %AGE -2.7 6.6 28.7 41.1 45.2 63.6

OPERATING PROFIT -3.2 40.9 167 294.5 354.8 552.5

INVENTORY 243.3 168.1 148.5 279.9 378 352.4




SALES GROWTH IN %AGE 16 -18.8 15.1 30.1 22.9 28.5

TOTAL ASSETS 802.6 554.2 561.2 705.3 765.5 834.4

TOTAL LIABILITIES 491.7 229.4 202 327 747.6 714.4



126

TABLE 4.143: Unilever Pakistan Ltd.

2003 2004 2005 2006 2007 2008

RUPEES IN MILLIONS

SALES 22966 22335.9 22473.2 26536.8 29854.8 39057.2

COST OF SALES 16171.2 16812.5 15619.5 18658.6 20771.7 28121.5



INVENTORY 2616.9 1809.1 1804.8 2156.5 2726.1 4261.8





TOTAL ASSETS 6483.8 5823.6 5784.8 6412.9 8072.1 11379.2


Chapter 5 Analyses and Findings


127

CHAPTER 5

ANALYSES AND FINDINGS

This chapter includes the analyses of the data that has been presented in the preceding

chapter and the results drawn from the analyses to arrive at certain plausible

conclusion(s). The chapter starts from the descriptive and quantitative analyses of each

individual firm in both samples. Section 5.1 includes the Descriptive and Quantitative

analyses for firms in Sample 1 and section 5.2 contains the same for firms in Sample 2. In

the descriptive analysis of firms, all the concerned variables relating to profitability,

management of working capital and liquidity are calculated for each firm and for each

year of study along with their mean value and standard deviation. The quantitative

analysis for firms includes a Correlation matrix for each individual company of both

samples to measure the causal relationships between the indicators of their profitability

and the predictors of their liquidity and efficiency in managing the working capital.

Section 5.3 and 5.4 accumulate the results of the Correlation analyses of firms in Sample

1 and that in Sample 2 respectively, and section 5.5 compares the results of the

Correlation analyses of the individual firms of the two samples.

After the individual company analyses are done, analyses of the pooled data of firms are

performed separately for each sample. Section 5.6 comprises of the descriptive portion of

the analyses for each sample. The subsequent section includes the quantitative analyses

for Sample 1 and Sample 2. This section involves two types of statistical analyses --- the

Correlation Analyses and the Regression Analyses. In the first portion, a Correlation

analysis is performed for each sample separately and then the results of the analyses of

the two samples are compared to discover change(s) in the effect of WCM and liquidity

on the profitability of firms in Sample 1 and that in Sample 2. The second portion

involves linear regressions. Since, two profitability measures are used in this study, i.e.

the Return on Assets (ROA) and the Operating Profit to Sales (OPS), separate Regression

analyses is made to measure the effect of WCM and liquidity indicators on each

profitability variable for both samples. The section ends by comparing the results of both

the Regression analyses and identifying the differences in the results of the two samples.



128


TABLE 5.1: Descriptive Analysis for Aruj Garment Accessories Ltd.

TABLE 5.2: Quantitative Analysis for Aruj Garment Accessories Ltd.

VARIABLES 2003 2004 2005 2006 2007 2008 Mean S.Dev

Return on Assets -0.043 0.022 0.023 0.109 0.086 0.057 0.042 0.054

Operating Profit to Sales -0.041 0.052 0.053 0.100 0.091 0.072 0.055 0.050

Inventory Conversion Period 63.98 80.21 138.86 98.03 118.36 95.43 99.14 26.67

Receivable Collection Period 20.44 17.52 18.62 5.84 7.30 1.83 11.92 7.86

Payable Deferral Period 299.38 241.64 267.60 161.06 167.43 139.35 212.74 65.52

Cash Conversion Cycle -215 -143.9 -110.1 -57.18 -41.78 -42.10 -101.7 69.00

Current Ratio 0.468 0.626 0.919 1.022 1.089 1.034 0.860 0.253

Financial Leverage 0.550 0.575 0.433 0.488 0.520 0.569 0.523 0.055

Size (Measured by LN Sales) 17.661 18.204 18.256 19.081 19.259 19.389 18.642 0.698

Sales Growth -0.167 0.720 0.053 1.283 0.194 0.139 0.370 0.535



129

This Correlation Matrix shows some significant relationships. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.461 with ICP, significant -0.811 with RCP, significant -0.877 with PDP, significant 0.919 with CCC and significant 0.882 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.582 with ICP, non-significant -0.733 with RCP, significant -0.826 with PDP, significant 0.926 with CCC and significant 0.884 with CR. TABLE 5.3: Descriptive Analysis for International Knitwear Ltd.


Return on Assets 0.015 0.757 0.031 0.030 0.086 0.159 0.180 0.288

Operating Profit to Sales 0.030 0.379 0.034 0.036 0.070 0.109 0.110 0.135




Cash Conversion Cycle -61.52 -113.3 -71.22 -63.40 -32.58 -31.21 -62.21 30.11

Current Ratio 0.959 0.931 0.904 0.963 1.068 1.323 1.025 0.156



Sales Growth 0.204 0.533 -0.340 0.035 0.692 0.240 0.227 0.366

TABLE 5.4: Quantitative Analysis for International Knitwear Ltd.



130

This Correlation Matrix indicates that only RCP has significant negative associations with the profitability measures. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.289 with ICP, significant -0.847 with RCP, non-significant 0.145 with PDP, non-significant -0.727 with CCC and non-significant -0.117 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.258 with ICP, significant -0.839 with RCP, non-significant 0.110 with PDP, non-significant -0.699 with CCC and non-significant -0.078 with CR. TABLE 5.5: Descriptive Analysis for Mubarak Textile Mills Ltd.


Return on Assets 0.009 -0.325 -0.307 -0.029 1.737 -0.129 0.159 0.785

Operating Profit to Sales 0.018 -0.529 -0.641 0.007 2.165 -0.107 0.152 1.025




Cash Conversion Cycle 59.68 -246.5 -532.9 -506.3 -469.3 -345.7 -340.2 223.66

Current Ratio 1.922 0.588 0.304 0.322 0.450 0.363 0.658 0.628




131


Sales Growth 0.426 -0.082 -0.413 0.616 0.210 -0.093 0.111 0.379

TABLE 5.6: Quantitative Analysis for Mubarak Textile Mills Ltd.

This Correlation Matrix also depicts that only RCP has significant negative relationships with the profitability measures. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.241 with ICP, significant -0.859 with RCP, non-significant -0.100 with PDP, non-significant -0.212 with CCC and non-significant -0.069 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.225 with ICP, significant -0.887 with RCP, non-significant 0.148 with PDP, non-significant -0.174 with CCC and non-significant -0.042 with CR. TABLE 5.7: Descriptive Analysis for Mukhtar Textile Mills Ltd.


Return on Assets 0.034 -1.232 -0.156 0.036 0.019 0.825 -0.079 0.662

Operating Profit to Sales 0.017 -0.528 -0.129 0.018 0.013 0.824 0.036 0.440





132


Cash Conversion Cycle -33.93 20.03 2.21 -9.43 3.58 -439.2 -76.12 178.76

Current Ratio 0.850 1.622 1.223 1.384 1.638 1.637 1.392 0.315



Sales Growth 0.155 0.123 -0.406 0.820 -0.297 -0.458 -0.011 0.485

TABLE 5.8: Quantitative Analysis for Mukhtar Textile Mills Ltd.

This Correlation Matrix shows a very few significant relationships between the profitability measures and that of WCM indicators. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.311 with ICP, non-significant 0.264 with RCP, non-significant 0.687 with PDP, non-significant -0.719 with CCC and non-significant -0.066 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.466 with ICP, non-significant 0.554 with RCP, significant 0.887 with PDP, significant -0.908 with CCC and non-significant 0.139 with CR. TABLE 5.9: Descriptive Analysis for Regent Textile Industries Ltd.


Return on Assets -0.032 -0.015 0.023 0.070 0.049 0.013 0.018 0.038



133

Operating Profit to Sales 0.055 -0.028 0.071 0.094 0.068 0.051 0.052 0.042





Current Ratio 0.228 0.182 1.262 0.344 0.400 0.443 0.477 0.397



Sales Growth -0.527 -0.256 -0.082 1.820 0.155 0.205 0.219 0.829

TABLE 5.10: Quantitative Analysis for Regent Textile Industries Ltd.

This Correlation Matrix shows no significant relationships between the profitability measures and that of WCM indicators. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.195 with ICP, non-significant -0.201 with RCP, non-significant -0.698 with PDP, non-significant 0.588 with CCC and non-significant 0.223 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.153 with ICP, non-significant 0.159 with



134

RCP, non-significant -0.743 with PDP, non-significant 0.650 with CCC and non-significant 0.372 with CR. TABLE 5.11: Descriptive Analysis for Safa Textiles Ltd.


Return on Assets 0.051 0.095 0.087 0.071 0.090 0.026 0.070 0.027





Cash Conversion Cycle 6.97 1.93 -18.80 -22.48 -22.66 -27.36 -13.73 14.43

Current Ratio 2.322 2.606 1.049 0.984 0.980 0.880 1.470 0.777



Sales Growth 0.215 0.195 0.139 0.262 0.166 0.383 0.227 0.087

TABLE 5.12: Quantitative Analysis for Safa Textiles Ltd.



135

This Correlation Matrix also has no significant relationships between the profitability measures and that of WCM indicators. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.121 with ICP, non-significant -0.400 with RCP, non-significant -0.187 with PDP, non-significant 0.167 with CCC and non-significant 0.199 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.706 with ICP, non-significant -0.481 with RCP, non-significant 0.646 with PDP, non-significant -0.424 with CCC and non-significant -0.413 with CR. TABLE 5.13: Descriptive Analysis for Amin Spinning Mills Ltd.


Return on Assets -0.372 1.409 -0.139 1.693 -0.047 -0.090 0.409 0.896

Operating Profit to Sales -0.161 0.910 -0.132 0.897 -0.022 -0.035 0.243 0.514





Current Ratio 0.060 0.339 0.055 0.199 0.207 0.199 0.177 0.106



Sales Growth -0.116 0.125 -0.364 0.970 0.100 0.081 0.133 0.450

TABLE 5.14: Quantitative Analysis for Amin Spinning Mills Ltd.



136

This Correlation Matrix too identifies no significant relationships between the profitability measures and that of WCM indicators. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.130 with ICP, non-significant 0.341 with RCP, non-significant -0.589 with PDP, non-significant 0.600 with CCC and non-significant 0.679 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.056 with ICP, non-significant 0.430 with RCP, non-significant -0.610 with PDP, non-significant 0.621 with CCC and non-significant 0.735 with CR. TABLE 5.15: Descriptive Analysis for Mehr Dastagir Textile Mills Ltd.


Return on Assets 0.025 0.015 0.008 0.002 0.001 -0.127 -0.013 0.057

Operating Profit to Sales 0.149 0.097 0.030 0.013 0.013 -0.174 0.021 0.110





Current Ratio 0.534 0.707 1.001 1.005 1.037 2.164 1.075 0.570




137


Sales Growth 0.337 0.192 1.244 -0.232 -0.035 -0.037 0.245 0.528

TABLE 5.16: Quantitative Analysis for Mehr Dastagir Textile Mills Ltd.

This Correlation Matrix demonstrates some significant relationships between the profitability measures and that of WCM indicators. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.208 with ICP, non-significant 0.616 with RCP, non-significant 0.789 with PDP, non-significant -0.683 with CCC and significant -0.978 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.311 with ICP, non-significant 0.552 with RCP, significant 0.900 with PDP, significant -0.882 with CCC and significant -0.987 with CR. TABLE 5.17: Descriptive Analysis for Bannu Woolen Mills Ltd.


Return on Assets 0.054 0.021 0.002 0.062 0.062 -0.024 0.030 0.036






138


Cash Conversion Cycle -14.21 -1.27 123.36 -1.01 103.32 -225.5 -2.55 124.01

Current Ratio 1.421 1.429 1.674 1.684 3.279 0.762 1.708 0.840



Sales Growth 0.180 -0.084 -0.451 0.955 0.025 0.122 0.125 0.464

TABLE 5.18: Quantitative Analysis for Bannu Woolen Mills Ltd.

This Correlation Matrix shows a negative significant relationship of PDP with the profitability measures. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.379 with ICP, non-significant -0.133 with RCP, significant -0.923 with PDP, non-significant 0.525 with CCC and significant 0.647 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.227 with ICP, non-significant -0.040 with RCP, significant -0.885 with PDP, non-significant 0.673 with CCC and non-significant 0.683 with CR. TABLE 5.19: Descriptive Analysis for Kashmir Polytex Ltd.


Return on Assets -0.022 0.001 -0.029 -0.174 -0.248 -0.248 -0.120 0.117



139

Operating Profit to Sales -0.018 0.020 -0.011 -0.156 -0.158 -0.158 -0.080 0.085





Current Ratio 0.739 0.794 0.928 0.430 0.292 0.292 0.579 0.276



Sales Growth 0.375 0.307 0.310 -0.083 -0.637 0.000 0.045 0.382

TABLE 5.20: Quantitative Analysis for Kashmir Polytex Ltd.

This Correlation Matrix shows many significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; significant 0.962 with ICP, non-significant -0.055 with RCP, significant -0.831 with PDP, significant 0.922 with CCC and significant 0.962 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; significant 0.881 with ICP, non-significant -0.247 with RCP,



140

non-significant -0.771 with PDP, significant 0.846 with CCC and significant 0.946 with CR. TABLE 5.21: Descriptive Analysis for Moonlite (Pak) Ltd.


Return on Assets 0.031 0.025 0.018 -0.067 0.738 0.738 0.247 0.382

Operating Profit to Sales 0.083 0.065 0.056 -0.018 1.379 1.379 0.491 0.689




Cash Conversion Cycle 161.84 131.51 83.81 17.43 389.27 389.27 195.52 157.80

Current Ratio 2.262 1.670 1.463 1.148 9.649 9.649 4.307 4.154



Sales Growth 0.313 -0.115 0.332 -0.221 -0.373 0.000 -0.011 0.286

TABLE 5.22: Quantitative Analysis for Moonlite (Pak) Ltd.



141

This Correlation Matrix also shows numerous significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.768 with ICP, significant 0.971 with RCP, significant -0.917 with PDP, significant 0.973 with CCC and significant 0.998 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.769 with ICP, significant 0.965 with RCP, significant -0.906 with PDP, significant 0.965 with CCC and significant 0.999 with CR. TABLE 5.23: Descriptive Analysis for Bawany Air Products Ltd.


Return on Assets 0.013 -0.009 -0.081 -0.063 -0.060 -0.118 -0.053 0.048

Operating Profit to Sales 0.028 -0.006 -0.189 -0.157 -0.106 -0.097 -0.088 0.085





Current Ratio 0.935 0.786 0.221 0.170 0.150 0.135 0.400 0.361



Sales Growth -0.192 0.156 -0.090 -0.016 0.249 0.052 0.027 0.161

TABLE 5.24: Quantitative Analysis for Bawany Air Products Ltd.



142

This Correlation Matrix shows a blend of significant and insignificant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; significant 0.834 with ICP, non-significant 0.686 with RCP, significant -0.896 with PDP, significant 0.939 with CCC and significant 0.909 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.761 with ICP, significant 0.822 with RCP, non-significant -0.656 with PDP, non-significant 0.735 with CCC and significant 0.883 with CR. TABLE 5.25: Descriptive Analysis for Data Agro Ltd.


Return on Assets -0.015 0.049 0.065 -0.016 0.006 0.005 0.016 0.034

Operating Profit to Sales -0.037 0.124 0.143 -0.047 0.027 0.012 0.037 0.080




Cash Conversion Cycle -950.5 -868.6 -669.1 -570.0 135.50 -208.7 -521.9 414.27

Current Ratio 0.172 0.470 0.575 0.460 2.516 0.758 0.825 0.850




143


Sales Growth 0.054 0.236 0.101 0.017 -0.023 1.017 0.234 0.394

TABLE 5.26: Quantitative Analysis for Data Agro Ltd.

This Correlation Matrix shows absolutely no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.148 with ICP, non-significant -0.455 with RCP, non-significant 0.170 with PDP, non-significant -0.198 with CCC and non-significant -0.057 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.100 with ICP, non-significant -0.460 with RCP, non-significant 0.115 with PDP, non-significant -0.147 with CCC and non-significant 0.019 with CR. TABLE 5.27: Descriptive Analysis for Leiner Pak Gelatine Ltd.


Return on Assets 0.046 0.030 0.053 0.077 0.019 0.001 0.038 0.027






144


Cash Conversion Cycle -43.36 -8.12 -235.6 25.64 16.95 1.21 -40.54 98.50

Current Ratio 1.601 1.412 1.317 1.481 1.319 1.226 1.393 0.135



Sales Growth 0.188 0.100 0.062 0.156 0.029 -0.070 0.078 0.093

TABLE 5.28: Quantitative Analysis for Leiner Pak Gelatine Ltd.

This Correlation Matrix also shows no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.337 with ICP, non-significant -0.532 with RCP, non-significant -0.366 with PDP, non-significant -0.247 with CCC and non-significant 0.631 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.429 with ICP, non-significant -0.606 with RCP, non-significant -0.279 with PDP, non-significant -0.362 with CCC and non-significant 0.694 with CR. TABLE 5.29: Descriptive Analysis for Sardar Chemical Industries Ltd.


Return on Assets -0.017 0.008 -0.006 0.007 0.029 0.013 0.006 0.016



145





Cash Conversion Cycle 94.89 74.66 87.74 -109.6 74.91 90.54 52.20 79.67

Current Ratio 1.630 1.691 1.752 1.806 1.829 1.838 1.758 0.083



Sales Growth -0.077 0.084 -0.047 0.032 0.097 0.065 0.026 0.072

TABLE 5.30: Quantitative Analysis for Sardar Chemical Industries Ltd.

This Correlation Matrix shows only one significant relationship between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; significant -0.815 with ICP, non-significant 0.158 with RCP, non-significant -0.448 with PDP, non-significant -0.116 with CCC and non-significant 0.777 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.601 with ICP, non-significant 0.122 with



146

RCP, non-significant -0.120 with PDP, non-significant -0.118 with CCC and non-significant 0.696 with CR. TABLE 5.31: Descriptive Analysis for Bela Automotives Ltd.


Return on Assets 0.005 0.022 0.022 0.017 0.005 0.014 0.014 0.008






Current Ratio 1.094 1.149 1.204 1.253 1.302 1.372 1.229 0.102



Sales Growth 0.245 0.952 0.319 0.164 -0.316 0.308 0.279 0.406

TABLE 5.32: Quantitative Analysis for Bela Automotives Ltd.



147

This Correlation Matrix shows no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.694 with ICP, non-significant -0.736 with RCP, non-significant -0.604 with PDP, non-significant 0.513 with CCC and non-significant -0.053 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.676 with ICP, non-significant -0.711 with RCP, non-significant -0.591 with PDP, non-significant 0.506 with CCC and non-significant 0.007 with CR. TABLE 5.33: Descriptive Analysis for Johnson & Philips (Pakistan) Ltd.


Return on Assets -0.290 -0.037 0.101 0.029 0.079 0.019 -0.017 0.142

Operating Profit to Sales -0.374 -0.073 0.151 0.054 0.092 0.068 -0.014 0.191




Cash Conversion Cycle -1420 -600.8 -328.1 -274.3 -105.1 -152.2 -480.0 492.22

Current Ratio 0.481 0.486 0.516 0.541 1.064 1.062 0.692 0.288



Sales Growth 0.000 -0.252 1.599 0.434 0.618 -0.333 0.344 0.720

TABLE 5.34: Quantitative Analysis for Johnson & Philips (Pakistan) Ltd.



148

This Correlation Matrix shows many significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.384 with ICP, significant -0.858 with RCP, significant -0.941 with PDP, significant 0.953 with CCC and non-significant 0.404 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.322 with ICP, significant -0.855 with RCP, significant -0.954 with PDP, significant 0.958 with CCC and non-significant 0.430 with CR. TABLE 5.35: Descriptive Analysis for The Climax Engineering Company Ltd.


Return on Assets -0.081 0.004 0.002 0.015 0.019 -0.052 -0.016 0.041

Operating Profit to Sales -0.060 0.023 0.008 0.044 0.091 -0.127 -0.003 0.078



Payable Deferral Period 1093 621.90 538.30 606.83 475.48 519.66 642.52 227.36

Cash Conversion Cycle -448.1 -106.6 -123.0 -125 26.97 -4.26 -123.0 168.66

Current Ratio 0.705 0.981 0.904 1.007 1.270 1.211 1.013 0.206




149


Sales Growth -0.009 0.144 0.397 -0.147 0.039 -0.028 0.066 0.188

TABLE 5.36: Quantitative Analysis for The Climax Engineering Company Ltd.

This Correlation Matrix shows no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.703 with ICP, non-significant -0.673 with RCP, non-significant -0.731 with PDP, non-significant 0.647 with CCC and non-significant 0.451 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.301 with ICP, non-significant -0.542 with RCP, non-significant -0.332 with PDP, non-significant 0.277 with CCC and non-significant 0.184 with CR. TABLE 5.37: Descriptive Analysis for Transmission Engineering Industries Ltd.


Return on Assets -0.075 0.039 0.044 -0.037 -0.306 -0.271 -0.101 0.153

Operating Profit to Sales 0.015 0.106 0.114 0.033 -0.196 -0.136 -0.011 0.128





150



Current Ratio 0.386 0.524 0.619 0.631 0.398 0.459 0.503 0.107



Sales Growth 0.694 0.472 0.147 0.178 -0.078 -0.085 0.221 0.309

TABLE 5.38: Quantitative Analysis for Transmission Engineering Industries Ltd.

This Correlation Matrix also shows no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.372 with ICP, non-significant 0.415 with RCP, non-significant -0.022 with PDP, non-significant 0.163 with CCC and non-significant 0.663 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.398 with ICP, non-significant 0.432 with RCP, non-significant 0.034 with PDP, non-significant 0.106 with CCC and non-significant 0.652 with CR. TABLE 5.39: Descriptive Analysis for Dadabhoy Sack Ltd.


Return on Assets -0.329 0.260 0.051 0.008 0.008 -0.162 -0.027 0.200



151





Cash Conversion Cycle -46.71 9.09 72.46 3.03 3.12 -25.92 2.51 40.42

Current Ratio 1.810 2.985 3.734 1.930 2.092 1.386 2.323 0.869



Sales Growth 0.011 0.453 -0.025 -0.035 -0.283 -0.316 -0.033 0.276

TABLE 5.40: Quantitative Analysis for Dadabhoy Sack Ltd.

This Correlation Matrix shows no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.081 with ICP, non-significant 0.128 with RCP, non-significant -0.351 with PDP, non-significant 0.645 with CCC and non-significant 0.643 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.318 with ICP, non-significant -0.240 with



152

RCP, non-significant -0.629 with PDP, non-significant 0.630 with CCC and non-significant 0.700 with CR. TABLE 5.41: Descriptive Analysis for Pakistan Paper Products Ltd.


Return on Assets 0.265 0.273 0.131 0.167 0.128 0.112 0.179 0.072






Current Ratio 2.272 2.320 2.597 2.982 2.501 2.267 2.490 0.276



Sales Growth 0.128 0.072 0.095 0.312 -0.025 0.089 0.112 0.111

TABLE 5.42: Quantitative Analysis for Pakistan Paper Products Ltd.



153

This Correlation Matrix shows only one significant relationship between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.800 with ICP, non-significant -0.728 with RCP, non-significant -0.619 with PDP, non-significant -0.811 with CCC and non-significant -0.317 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.076 with ICP, non-significant -0.115 with RCP, non-significant -0.379 with PDP, non-significant 0.233 with CCC and significant 0.887 with CR. TABLE 5.43: Descriptive Analysis for Ideal Energy Ltd.


Return on Assets 0.093 0.075 -0.026 -0.087 -0.041 -0.078 -0.011 0.077

Operating Profit to Sales 0.102 0.101 -0.036 -1.763 -1.222 -0.492 -0.552 0.779





Current Ratio 1.806 2.507 2.767 10.360 27.067 10.338 9.141 9.620



Sales Growth 0.128 -0.262 -0.157 -0.953 -0.258 3.514 0.335 1.597

TABLE 5.44: Quantitative Analysis for Ideal Energy Ltd.



154

This Correlation Matrix shows a couple of significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.438 with ICP, non-significant -0.591 with RCP, non-significant 0.253 with PDP, non-significant -0.594 with CCC and non-significant -0.526 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.765 with ICP, significant -0.938 with RCP, non-significant -0.178 with PDP, significant -0.932 with CCC and non-significant -0.689 with CR. TABLE 5.45: Descriptive Analysis for S.G. Power Ltd.


Return on Assets 0.057 0.046 0.019 -0.100 -0.046 -0.068 -0.015 0.065

Operating Profit to Sales 0.139 0.102 0.044 -0.168 -0.218 - -0.020 0.162




Cash Conversion Cycle 214.02 233.80 331.22 82.58 580.67 -223.9 203.06 267.17

Current Ratio 3.193 4.213 4.258 8.605 17.305 19.240 9.469 7.096




155

Size (Measured by LN Sales) 19.015 19.072 19.035 19.114 17.987 - 18.845 0.481

Sales Growth 0.108 0.059 -0.036 0.082 -0.676 -1.000 -0.244 0.474

TABLE 5.46: Quantitative Analysis for S.G. Power Ltd.

This Correlation Matrix shows no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.501 with RCP, non-significant 0.420 with PDP, non-significant 0.325 with CCC and non-significant -0.711 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.068 with RCP, non-significant 0.778 with PDP, non-significant -0.267 with CCC and non-significant -0.620 with CR. TABLE 5.47: Descriptive Analysis for Khyber Tobacco Company Ltd.


Return on Assets 0.058 0.038 0.207 0.549 2.052 0.204 0.518 0.773






156

Payable Deferral Period 3969 6675 3503 2176 854 364 2924 2319

Cash Conversion Cycle -3496 -5897 -3229 -2176 -763 -212 -2629 2065

Current Ratio 0.142 0.267 0.104 0.024 0.138 0.515 0.198 0.174



Sales Growth -0.820 0.163 0.246 0.620 1.235 1.720 0.527 0.890

TABLE 5.48: Quantitative Analysis for Khyber Tobacco Company Ltd.

This Correlation Matrix shows no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.524 with ICP, non-significant -0.541 with PDP, non-significant 0.535 with CCC and non-significant -0.260 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.385 with ICP, non-significant -0.374 with PDP, non-significant 0.367 with CCC and non-significant -0.371 with CR. TABLE 5.49: Descriptive Analysis for Sarhad Cigarette Industries Ltd.


Return on Assets -0.039 0.106 0.242 0.160 0.160 0.153 0.130 0.094



157





Cash Conversion Cycle -41.51 -61.26 -11.35 23.35 23.35 -51.13 -19.76 37.33

Current Ratio 1.112 1.045 1.474 1.943 1.943 1.947 1.577 0.428



Sales Growth 0.033 0.100 0.162 -0.106 0.000 0.579 0.128 0.239

TABLE 5.50: Quantitative Analysis for Sarhad Cigarette Industries Ltd.

This Correlation Matrix shows a significant negative relationship between the profitability measures and the PDP. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.467 with ICP, non-significant -0.762 with RCP, significant -0.937 with PDP, non-significant 0.427 with CCC and non-significant 0.550 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.559 with ICP, non-significant -0.741 with



158

RCP, significant -0.948 with PDP, non-significant 0.522 with CCC and non-significant 0.713 with CR. TABLE 5.51: Descriptive Analysis for Amin Fabrics Ltd.


Return on Assets -0.126 0.094 -0.153 -0.127 -0.212 -0.212 -0.123 0.113






Current Ratio 0.503 0.674 0.634 0.606 0.489 0.489 0.566 0.082



Sales Growth -0.137 -0.004 0.213 -0.314 0.567 0.000 0.054 0.305

TABLE 5.52: Quantitative Analysis for Amin Fabrics Ltd.



159

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.334 with ICP, non-significant -0.161 with RCP, non-significant -0.221 with PDP, non-significant 0.484 with CCC and non-significant 0.757 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.102 with ICP, non-significant -0.353 with RCP, non-significant -0.408 with PDP, non-significant 0.603 with CCC and non-significant 0.631 with CR. TABLE 5.53: Descriptive Analysis for Suhail Jute Mills Ltd.


Return on Assets 0.045 0.039 -0.031 0.008 -0.011 0.020 0.012 0.029

Operating Profit to Sales 0.132 0.316 -0.050 0.135 0.083 0.222 0.140 0.124





Current Ratio 3.082 2.551 1.408 1.547 1.651 1.741 1.997 0.666



Sales Growth 0.130 -0.567 1.431 -0.012 0.148 0.073 0.201 0.659

TABLE 5.54: Quantitative Analysis for Suhail Jute Mills Ltd.



160

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.308 with ICP, non-significant 0.492 with RCP, non-significant -0.178 with PDP, significant 0.855 with CCC and significant 0.860 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.593 with ICP, significant 0.876 with RCP, non-significant 0.303 with PDP, non-significant 0.654 with CCC and non-significant 0.488 with CR. TABLE 5.55: Descriptive Analysis for Kakakhel Pakistan Ltd.


Return on Assets 0.095 0.076 -0.021 -0.082 -0.041 -0.032 -0.001 0.070

Operating Profit to Sales 0.265 0.299 0.005 -0.170 -0.023 -0.008 0.061 0.182





Current Ratio 0.193 0.483 0.315 0.243 0.302 0.335 0.312 0.099




161


Sales Growth -0.159 -0.185 0.113 1.130 0.724 1.690 0.552 0.762

TABLE 5.56: Quantitative Analysis for Kakakhel Pakistan Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.617 with ICP, non-significant -0.664 with RCP, non-significant -0.052 with PDP, non-significant -0.130 with CCC and non-significant 0.201 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.613 with ICP, non-significant -0.609 with RCP, non-significant -0.011 with PDP, non-significant -0.167 with CCC and non-significant 0.349 with CR. TABLE 5.57: Descriptive Analysis for Al-Khair Gadoon Ltd.


Return on Assets 0.016 0.036 0.027 0.034 -0.009 0.031 0.023 0.017






162



Current Ratio 4.112 3.893 2.392 2.103 1.818 1.654 2.662 1.071



Sales Growth 3.615 -0.070 0.296 1.185 0.531 -0.056 0.917 1.400

TABLE 5.58: Quantitative Analysis for Al-Khair Gadoon Ltd.

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.430 with ICP, non-significant 0.391 with RCP, non-significant 0.300 with PDP, non-significant 0.184 with CCC and non-significant 0.193 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.786 with ICP, significant 0.891 with RCP, non-significant 0.689 with PDP, non-significant 0.114 with CCC and non-significant 0.122 with CR. TABLE 5.59: Descriptive Analysis for Diamond Industries Ltd.


Return on Assets 0.010 -0.119 0.000 -0.031 -0.002 -0.071 -0.036 0.050



163

Operating Profit to Sales 0.139 -0.076 0.049 -0.525 -0.063 - -0.095 0.256




Cash Conversion Cycle -220.1 27.0 -0.4 -25.6 1082.8 -1790 -154.4 925.7

Current Ratio 5.216 17.166 4.213 4.628 6.649 5.425 7.216 4.945


Size (Measured by LN Sales) 17.096 19.421 18.880 17.010 15.656 - 17.613 1.527

Sales Growth 0.632 9.218 -0.418 -0.846 -0.742 -1.000 1.141 4.000

TABLE 5.60: Quantitative Analysis for Diamond Industries Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.444 with ICP, non-significant 0.386 with RCP, non-significant 0.035 with PDP, non-significant 0.375 with CCC and non-significant -0.799 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.436 with ICP, non-significant -0.141 with RCP, non-significant -0.106 with PDP, non-significant -0.010 with CCC and non-significant 0.069 with CR.



164

TABLE 5.61: Descriptive Analysis for Goodluck Industries Ltd.


Return on Assets 0.163 0.133 0.135 0.125 0.157 0.194 0.151 0.026






Current Ratio 2.092 2.000 3.405 4.290 1.695 1.958 2.573 1.034



Sales Growth 0.052 -0.063 0.128 0.083 0.004 0.263 0.078 0.112

TABLE 5.62: Quantitative Analysis for Goodluck Industries Ltd.



165

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.619 with ICP, non-significant 0.727 with RCP, non-significant 0.233 with PDP, significant -0.927 with CCC and non-significant -0.642 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.200 with ICP, non-significant 0.179 with RCP, non-significant 0.808 with PDP, non-significant -0.589 with CCC and significant -0.937 with CR. TABLE 5.63: Descriptive Analysis for Grays Of Cambridge (Pakistan) Ltd.


Return on Assets 0.127 0.108 0.082 0.098 0.080 0.041 0.089 0.029





Cash Conversion Cycle -564.4 56.09 262.90 238.27 225.31 240.45 76.43 322.85

Current Ratio 1.916 5.802 20.217 15.284 12.322 11.766 11.218 6.556



Sales Growth -0.247 -0.036 0.034 0.197 0.081 0.065 0.016 0.149

TABLE 5.64: Quantitative Analysis for Grays Of Cambridge (Pakistan) Ltd.



166

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.680 with ICP, non-significant 0.206 with RCP, non-significant 0.726 with PDP, non-significant -0.712 with CCC and non-significant -0.539 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.581 with ICP, non-significant 0.167 with RCP, non-significant 0.713 with PDP, non-significant -0.690 with CCC and non-significant -0.484 with CR. TABLE 5.65: Descriptive Analysis for Haji Dossa Ltd.


Return on Assets 0.000 9.683 0.407 0.053 0.071 0.035 1.708 3.910






Current Ratio 0.787 1.652 1.410 1.080 1.278 1.104 1.219 0.299




167


Sales Growth 0.000 0.838 0.223 -0.671 2.135 -0.053 0.412 0.974

TABLE 5.66: Quantitative Analysis for Haji Dossa Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.258 with ICP, non-significant -0.583 with RCP, non-significant -0.244 with PDP, non-significant -0.042 with CCC and non-significant 0.731 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.093 with ICP, non-significant -0.488 with RCP, non-significant -0.079 with PDP, non-significant -0.182 with CCC and non-significant 0.718 with CR. TABLE 5.67: Descriptive Analysis for Hashimi Can Company Ltd.


Return on Assets -0.041 0.003 -0.035 -0.076 -0.090 -0.074 -0.052 0.034






168


Cash Conversion Cycle -364.2 -233.1 -279.3 -513.4 -866.1 -1467 -620.5 473.4

Current Ratio 0.504 0.678 0.627 0.530 0.431 0.390 0.527 0.111



Sales Growth 0.077 0.193 -0.165 -0.403 -0.303 -0.414 -0.169 0.255

TABLE 5.68: Quantitative Analysis for Hashimi Can Company Ltd.

This Correlation Matrix shows several significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.754 with ICP, non-significant -0.662 with RCP, non-significant -0.685 with PDP, non-significant 0.678 with CCC and significant 0.856 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; significant -0.987 with ICP, significant -0.992 with RCP, significant -0.995 with PDP, significant 0.993 with CCC and significant 0.854 with CR. TABLE 5.69: Descriptive Analysis for Indus Fruit Products Ltd.


Return on Assets -0.058 -0.063 -0.168 -0.102 -0.165 -0.162 -0.120 0.052



169

Operating Profit to Sales -3.760 -0.291 -1.806 -0.583 -0.601 -0.232 -1.212 1.373




Cash Conversion Cycle -1070 -561.5 -1135 -1094 -988.7 -540.9 -898.3 273.10

Current Ratio 0.717 0.335 0.172 0.209 0.131 0.191 0.293 0.219



Sales Growth 1.083 12.320 -0.628 0.952 0.938 1.544 2.702 4.769

TABLE 5.70: Quantitative Analysis for Indus Fruit Products Ltd.

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.633 with ICP, non-significant 0.023 with RCP, non-significant 0.478 with PDP, non-significant 0.077 with CCC and non-significant 0.783 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; significant -0.913 with ICP, non-significant 0.283 with RCP,



170

significant -0.962 with PDP, non-significant 0.566 with CCC and significant -0.813 with CR. TABLE 5.71: Descriptive Analysis for Leather Up Ltd.


Return on Assets -0.121 -0.076 -0.076 -0.014 -0.099 -0.085 -0.079 0.036

Operating Profit to Sales -0.139 -0.181 -0.181 0.034 -0.151 -0.197 -0.136 0.086




Cash Conversion Cycle -15.85 134.17 134.17 86.90 20.33 -96.78 43.82 91.72

Current Ratio 2.365 2.367 2.367 2.289 1.943 1.618 2.158 0.312



Sales Growth -0.115 -0.583 0.000 0.050 -0.138 -0.502 -0.215 0.265

TABLE 5.72: Quantitative Analysis for Leather Up Ltd.



171

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.461 with ICP, non-significant 0.039 with RCP, non-significant 0.082 with PDP, non-significant 0.435 with CCC and non-significant 0.154 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.121 with ICP, non-significant -0.553 with RCP, non-significant -0.343 with PDP, non-significant 0.211 with CCC and non-significant 0.291 with CR. TABLE 5.73: Descriptive Analysis for Mandviwala Mauser Plastic Industries Ltd.


Return on Assets 0.041 -0.131 -0.208 0.199 -0.087 -0.094 -0.047 0.145

Operating Profit to Sales 0.063 -0.103 -0.143 0.246 -0.065 -0.092 -0.016 0.146





Current Ratio 0.657 0.474 0.372 0.641 0.518 0.591 0.542 0.109



Sales Growth 0.229 -0.094 0.106 -0.231 0.315 -0.178 0.025 0.225

TABLE 5.74: Quantitative Analysis for Mandviwala Mauser Plastic Industries Ltd.



172

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.054 with ICP, non-significant 0.200 with RCP, non-significant 0.091 with PDP, non-significant -0.105 with CCC and significant 0.837 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.128 with ICP, non-significant -0.100 with RCP, non-significant 0.039 with PDP, non-significant -0.099 with CCC and non-significant 0.752 with CR. TABLE 5.75: Descriptive Analysis for Pakistan House International Ltd.


Return on Assets -0.017 0.012 -0.105 0.064 0.025 0.005 -0.003 0.057

Operating Profit to Sales -0.027 0.024 -0.327 0.208 0.068 0.009 -0.007 0.177





Current Ratio 3.429 3.767 1.204 1.493 4.355 1.790 2.673 1.336




173


Sales Growth -0.343 0.009 -0.089 -0.137 0.167 0.744 0.059 0.376

TABLE 5.76: Quantitative Analysis for Pakistan House International Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.144 with RCP, non-significant -0.536 with PDP, non-significant 0.549 with CCC and non-significant 0.307 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.081 with RCP, non-significant -0.531 with PDP, non-significant 0.550 with CCC and non-significant 0.294 with CR. TABLE 5.77: Descriptive Analysis for Quice Food Industries Ltd.


Return on Assets -0.026 -0.439 3.026 3.026 0.087 0.085 0.960 1.612

Operating Profit to Sales -0.653 -1.977 6.419 6.419 0.119 0.118 1.741 3.704





174



Current Ratio 2.787 0.430 0.280 0.280 0.358 0.442 0.763 0.994



Sales Growth 0.000 0.842 0.840 0.000 0.621 0.025 0.388 0.424

TABLE 5.78: Quantitative Analysis for Quice Food Industries Ltd.

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.582 with ICP, non-significant -0.467 with RCP, non-significant -0.204 with PDP, non-significant -0.809 with CCC and non-significant -0.361 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.611 with ICP, non-significant -0.508 with RCP, non-significant -0.237 with PDP, significant -0.842 with CCC and non-significant -0.377 with CR. TABLE 5.79: Descriptive Analysis for Syed Match Company Ltd.


Return on Assets -0.236 -0.310 -0.228 -0.240 -0.315 -0.085 -0.236 0.083



175

Operating Profit to Sales -0.162 -0.145 -0.132 -0.162 -0.305 -0.056 -0.160 0.081





Current Ratio 0.209 0.141 0.219 0.161 0.214 0.229 0.196 0.036



Sales Growth 19.133 0.258 0.055 -0.200 -0.171 0.143 3.203 7.806

TABLE 5.80: Quantitative Analysis for Syed Match Company Ltd.

This Correlation Matrix also shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.438 with ICP, significant 0.895 with RCP, non-significant 0.501 with PDP, non-significant -0.480 with CCC and non-significant 0.536 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.111 with ICP, non-significant 0.624 with



176

RCP, non-significant -0.058 with PDP, non-significant 0.079 with CCC and non-significant 0.047 with CR.


TABLE 5.81: Descriptive Analysis for Azgard Nine Ltd.


Return on Assets 0.052 0.064 0.075 0.008 0.064 -0.053 0.035 0.049






Current Ratio 1.039 1.253 1.095 0.711 0.884 1.805 1.131 0.379



Sales Growth 1.096 0.229 0.411 0.421 0.953 -0.086 0.504 0.445

TABLE 5.82: Quantitative Analysis for Azgard Nine Ltd.



177

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.020 with ICP, significant 0.818 with RCP, non-significant -0.321 with PDP, non-significant 0.518 with CCC and non-significant -0.588 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.787 with ICP, non-significant -0.535 with RCP, non-significant 0.110 with PDP, non-significant -0.492 with CCC and non-significant 0.081 with CR. TABLE 5.83: Descriptive Analysis for Colony Textile Mills Ltd.


Return on Assets 0.019 0.013 0.034 0.015 0.050 0.029 0.027 0.014






Current Ratio 0.659 0.867 1.008 1.014 1.011 1.004 0.927 0.143



Sales Growth 0.600 0.399 0.014 -0.441 1.811 0.210 0.432 0.764

TABLE 5.84: Quantitative Analysis for Colony Textile Mills Ltd.



178

This Correlation Matrix also shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.350 with ICP, non-significant 0.246 with RCP, non-significant -0.266 with PDP, non-significant 0.238 with CCC and non-significant 0.457 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.473 with ICP, significant 0.821 with RCP, non-significant 0.587 with PDP, non-significant -0.634 with CCC and non-significant 0.666 with CR. TABLE 5.85: Descriptive Analysis for Dewan Textile Mills Ltd.


Return on Assets 0.012 0.015 0.009 0.010 0.006 -0.049 0.001 0.024






Current Ratio 1.076 0.984 0.963 1.296 1.277 1.159 1.126 0.143




179


Sales Growth 0.190 0.011 -0.298 0.156 0.110 0.255 0.071 0.198

TABLE 5.86: Quantitative Analysis for Dewan Textile Mills Ltd.

This Correlation Matrix also depicts only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.133 with ICP, non-significant -0.585 with RCP, non-significant 0.287 with PDP, significant -0.843 with CCC and non-significant -0.184 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.252 with ICP, non-significant 0.049 with RCP, non-significant 0.436 with PDP, non-significant -0.520 with CCC and non-significant 0.553 with CR. TABLE 5.87: Descriptive Analysis for Faisal Spinning Mills Ltd.


Return on Assets 0.071 0.032 0.050 0.050 0.038 0.035 0.046 0.014






180



Current Ratio 0.998 0.864 0.811 1.173 0.950 1.009 0.968 0.127



Sales Growth 0.108 0.619 -0.186 0.317 0.049 0.097 0.167 0.273

TABLE 5.88: Quantitative Analysis for Faisal Spinning Mills Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.150 with ICP, non-significant 0.148 with RCP, non-significant 0.187 with PDP, non-significant -0.166 with CCC and non-significant 0.229 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.614 with ICP, non-significant 0.350 with RCP, non-significant 0.380 with PDP, non-significant 0.001 with CCC and non-significant 0.482 with CR. TABLE 5.89: Descriptive Analysis for Fateh Textile Mills Ltd.


Return on Assets 0.033 0.034 0.020 0.018 0.013 0.004 0.020 0.012



181






Current Ratio 1.832 1.750 1.746 1.724 1.608 1.443 1.684 0.138



Sales Growth 0.294 0.063 -0.224 0.137 -0.058 -0.244 -0.005 0.211

TABLE 5.90: Quantitative Analysis for Fateh Textile Mills Ltd.

This Correlation Matrix shows a blend of significant and non-significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.779 with ICP, significant -0.838 with RCP, significant 0.843 with PDP, significant -0.893 with CCC and significant 0.892 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.101 with ICP, non-significant 0.338 with



182

RCP, non-significant 0.299 with PDP, non-significant -0.201 with CCC and non-significant -0.168 with CR. TABLE 5.91: Descriptive Analysis for Fatima Enterprises Ltd.


Return on Assets 0.034 0.052 0.026 -0.007 0.004 0.014 0.021 0.021






Current Ratio 0.821 0.885 0.904 0.928 0.813 0.848 0.867 0.046



Sales Growth 0.137 0.080 -0.287 0.395 0.268 0.436 0.172 0.264

TABLE 5.92: Quantitative Analysis for Fatima Enterprises Ltd.



183

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.553 with ICP, non-significant -0.733 with RCP, non-significant -0.807 with PDP, significant -0.952 with CCC and non-significant -0.104 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.775 with ICP, non-significant 0.518 with RCP, non-significant 0.591 with PDP, non-significant -0.110 with CCC and non-significant -0.347 with CR. TABLE 5.93: Descriptive Analysis for Fazal Cloth Mills Ltd.


Return on Assets 0.072 0.052 0.051 0.035 0.022 0.035 0.045 0.018






Current Ratio 0.913 0.912 1.002 1.074 0.409 1.191 0.917 0.270



Sales Growth 0.220 0.313 -0.124 0.434 0.160 0.171 0.196 0.187

TABLE 5.94: Quantitative Analysis for Fazal Cloth Mills Ltd.



184

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.233 with ICP, significant -0.917 with RCP, non-significant -0.723 with PDP, non-significant 0.636 with CCC and non-significant 0.326 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.487 with ICP, non-significant 0.688 with RCP, non-significant 0.177 with PDP, non-significant -0.050 with CCC and non-significant 0.345 with CR. TABLE 5.95: Descriptive Analysis for Gadoon Textile Mills Ltd.


Return on Assets 0.038 0.382 0.048 0.059 0.055 -0.018 0.094 0.144






Current Ratio 0.995 0.975 1.005 0.917 0.890 0.911 0.949 0.049




185


Sales Growth 0.123 0.650 -0.408 0.284 -0.090 0.317 0.146 0.365

TABLE 5.96: Quantitative Analysis for Gadoon Textile Mills Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.690 with ICP, non-significant -0.524 with RCP, non-significant -0.784 with PDP, non-significant 0.485 with CCC and non-significant 0.286 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.641 with ICP, non-significant -0.505 with RCP, non-significant -0.728 with PDP, non-significant 0.435 with CCC and non-significant 0.234 with CR. TABLE 5.97: Descriptive Analysis for Gul Ahmed Textile Mills Ltd.


Return on Assets 0.063 0.028 0.012 0.001 0.026 0.016 0.024 0.021






186



Current Ratio 1.047 1.041 1.063 1.016 0.947 0.915 1.005 0.060



Sales Growth -0.034 0.197 -0.118 0.399 0.197 0.190 0.139 0.186

TABLE 5.98: Quantitative Analysis for Gul Ahmed Textile Mills Ltd.

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.679 with ICP, non-significant -0.403 with RCP, non-significant -0.371 with PDP, non-significant -0.756 with CCC and non-significant 0.224 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.735 with ICP, significant -0.831 with RCP, non-significant -0.719 with PDP, non-significant -0.225 with CCC and non-significant -0.146 with CR. TABLE 5.99: Descriptive Analysis for Gulistan Textile Mills Ltd.


Return on Assets 0.023 0.016 0.017 0.017 0.009 0.016 0.016 0.004



187






Current Ratio 1.314 1.130 1.102 1.497 1.370 1.232 1.274 0.150



Sales Growth 0.239 0.248 -0.307 0.350 0.185 0.213 0.155 0.233

TABLE 5.100: Quantitative Analysis for Gulistan Textile Mills Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.508 with ICP, non-significant -0.518 with RCP, non-significant -0.561 with PDP, non-significant 0.696 with CCC and non-significant -0.102 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.650 with ICP, non-significant 0.449 with



188

RCP, non-significant 0.644 with PDP, non-significant -0.669 with CCC and non-significant 0.628 with CR. TABLE 5.101: Descriptive Analysis for Indus Dyeing & Manufacturing Co. Ltd.


Return on Assets 0.107 0.116 0.090 0.060 0.081 0.023 0.080 0.034






Current Ratio 1.006 1.133 1.107 0.875 1.265 1.364 1.125 0.175



Sales Growth 0.168 0.518 0.047 0.576 0.066 0.111 0.248 0.236

TABLE 5.102: Quantitative Analysis for Indus Dyeing & Manufacturing Co. Ltd.



189

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.151 with ICP, non-significant -0.506 with RCP, non-significant -0.464 with PDP, non-significant 0.155 with CCC and non-significant -0.389 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.620 with ICP, non-significant -0.639 with RCP, non-significant 0.568 with PDP, non-significant -0.356 with CCC and non-significant -0.289 with CR. TABLE 5.103: Descriptive Analysis for Kohinoor Textile Mills Ltd.


Return on Assets 0.030 0.075 0.075 0.031 -0.002 0.010 0.037 0.032






Current Ratio 1.228 1.391 1.093 1.990 2.331 1.740 1.629 0.478



Sales Growth -0.399 0.069 0.636 -0.238 0.034 0.059 0.027 0.354

TABLE 5.104: Quantitative Analysis for Kohinoor Textile Mills Ltd.



190

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.109 with ICP, significant -0.898 with RCP, non-significant -0.731 with PDP, non-significant 0.591 with CCC and non-significant -0.767 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.717 with ICP, non-significant -0.312 with RCP, non-significant 0.088 with PDP, non-significant 0.444 with CCC and non-significant -0.498 with CR. TABLE 5.105: Descriptive Analysis for Mahmood Textile Mills Ltd.


Return on Assets 0.073 0.069 0.075 0.056 0.070 0.019 0.060 0.021





Cash Conversion Cycle 3.49 14.28 17.69 -8.97 -17.03 -12.03 -0.43 14.44

Current Ratio 2.994 2.751 1.625 1.401 1.460 1.350 1.930 0.740




191


Sales Growth 9.813 0.000 -0.266 0.337 0.158 0.123 1.694 3.982

TABLE 5.106: Quantitative Analysis for Mahmood Textile Mills Ltd.

This Correlation Matrix shows a couple of significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.438 with ICP, significant -0.881 with RCP, non-significant -0.551 with PDP, non-significant 0.519 with CCC and non-significant 0.480 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.760 with ICP, non-significant 0.066 with RCP, non-significant 0.767 with PDP, non-significant -0.355 with CCC and significant -0.819 with CR. TABLE 5.107: Descriptive Analysis for Masood Textile Mills Ltd.


Return on Assets 0.033 0.026 0.022 0.027 0.026 0.050 0.031 0.010






192



Current Ratio 0.984 1.035 1.125 1.032 0.939 1.320 1.073 0.136



Sales Growth 0.816 0.123 -0.053 0.543 0.186 0.328 0.324 0.314

TABLE 5.108: Quantitative Analysis for Masood Textile Mills Ltd.

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.743 with ICP, non-significant 0.100 with RCP, significant -0.889 with PDP, non-significant 0.676 with CCC and non-significant 0.736 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.445 with ICP, non-significant -0.118 with RCP, non-significant -0.536 with PDP, non-significant 0.292 with CCC and non-significant 0.603 with CR. TABLE 5.109: Descriptive Analysis for Nishat (Chunian) Ltd.


Return on Assets 0.123 0.157 0.092 0.036 0.011 0.007 0.071 0.062



193






Current Ratio 0.998 1.123 0.885 0.785 0.786 0.811 0.898 0.137



Sales Growth 0.045 0.559 -0.178 0.192 0.169 0.193 0.163 0.240

TABLE 5.110: Quantitative Analysis for Nishat (Chunian) Ltd.

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.805 with ICP, non-significant 0.003 with RCP, significant -0.861 with PDP, significant 0.822 with CCC and significant 0.949 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.214 with ICP, non-significant 0.145 with



194

RCP, non-significant 0.091 with PDP, non-significant 0.038 with CCC and non-significant 0.087 with CR. TABLE 5.111: Descriptive Analysis for Nishat Mills Ltd.


Return on Assets 0.035 0.050 0.079 0.056 0.046 0.169 0.073 0.049






Current Ratio 1.213 1.304 1.900 2.917 3.764 2.326 2.237 0.983



Sales Growth 0.104 0.158 -0.259 0.440 0.030 0.123 0.099 0.225

TABLE 5.112: Quantitative Analysis for Nishat Mills Ltd.



195

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.426 with ICP, non-significant -0.061 with RCP, significant 0.854 with PDP, non-significant -0.522 with CCC and non-significant 0.058 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.497 with ICP, non-significant -0.294 with RCP, non-significant 0.779 with PDP, non-significant -0.404 with CCC and non-significant 0.266 with CR. TABLE 5.113: Descriptive Analysis for Quetta Textile Mills Ltd.


Return on Assets 0.031 0.027 0.026 0.018 0.026 0.006 0.022 0.009






Current Ratio 0.856 0.864 0.826 0.730 0.793 0.730 0.800 0.060



Sales Growth 0.243 0.233 -0.305 0.656 0.075 0.181 0.181 0.310

TABLE 5.114: Quantitative Analysis for Quetta Textile Mills Ltd.



196

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.592 with ICP, non-significant -0.690 with RCP, significant -0.639 with PDP, non-significant 0.617 with CCC and significant 0.853 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.672 with ICP, non-significant 0.577 with RCP, non-significant 0.691 with PDP, non-significant -0.694 with CCC and non-significant -0.634 with CR. TABLE 5.115: Descriptive Analysis for Reliance Weaving Mills Ltd.


Return on Assets 0.058 0.061 0.033 0.043 0.014 -0.020 0.032 0.031






Current Ratio 0.927 0.956 0.843 0.696 0.998 0.832 0.875 0.109




197


Sales Growth 0.098 0.226 -0.253 0.516 0.079 0.032 0.116 0.252

TABLE 5.116: Quantitative Analysis for Reliance Weaving Mills Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.667 with ICP, non-significant -0.432 with RCP, non-significant -0.650 with PDP, non-significant 0.585 with CCC and non-significant 0.104 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.162 with ICP, non-significant 0.420 with RCP, non-significant 0.419 with PDP, non-significant -0.563 with CCC and non-significant -0.780 with CR. TABLE 5.117: Descriptive Analysis for Saif Textile Mills Ltd.


Return on Assets 0.035 0.021 0.012 0.015 -0.005 -0.019 0.010 0.019






198



Current Ratio 1.011 1.025 0.944 0.860 0.896 0.862 0.933 0.073



Sales Growth 0.235 0.431 0.144 0.562 0.098 0.177 0.275 0.182

TABLE 5.118: Quantitative Analysis for Saif Textile Mills Ltd.

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; significant 0.891 with ICP, non-significant 0.327 with RCP, non-significant 0.145 with PDP, non-significant 0.785 with CCC and non-significant 0.751 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.293 with ICP, non-significant 0.310 with RCP, non-significant 0.118 with PDP, non-significant 0.335 with CCC and non-significant -0.239 with CR. TABLE 5.119: Descriptive Analysis for Sapphire Fibres Ltd.


Return on Assets 0.072 0.059 0.049 0.040 0.050 0.115 0.064 0.027



199






Current Ratio 1.407 1.570 1.499 2.183 3.022 2.649 2.055 0.674



Sales Growth 0.059 0.235 -0.225 0.428 0.126 0.202 0.138 0.217

TABLE 5.120: Quantitative Analysis for Sapphire Fibres Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.047 with ICP, non-significant -0.233 with RCP, non-significant 0.048 with PDP, non-significant -0.135 with CCC and non-significant 0.211 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.393 with ICP, non-significant -0.225 with



200

RCP, non-significant 0.501 with PDP, non-significant -0.745 with CCC and non-significant 0.703 with CR. TABLE 5.121: Descriptive Analysis for Sapphire Textile Mills Ltd.


Return on Assets 0.103 0.044 0.052 0.029 0.029 0.054 0.052 0.027






Current Ratio 1.235 1.354 1.338 1.205 1.605 1.403 1.357 0.143



Sales Growth 0.142 0.306 -0.287 0.487 0.103 0.068 0.137 0.260

TABLE 5.122: Quantitative Analysis for Sapphire Textile Mills Ltd.



201

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.278 with ICP, non-significant 0.088 with RCP, non-significant -0.384 with PDP, non-significant 0.371 with CCC and non-significant -0.426 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.608 with ICP, non-significant -0.427 with RCP, non-significant 0.651 with PDP, non-significant -0.523 with CCC and non-significant -0.004 with CR. TABLE 5.123: Descriptive Analysis for Suraj Cotton Mills Ltd.


Return on Assets 0.078 0.058 0.067 0.047 0.105 0.042 0.066 0.023






Current Ratio 1.192 1.100 1.222 0.854 0.820 0.967 1.026 0.171



Sales Growth -0.065 0.581 -0.231 0.427 0.109 0.001 0.137 0.309

TABLE 5.124: Quantitative Analysis for Suraj Cotton Mills Ltd.



202

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.104 with ICP, non-significant 0.271 with RCP, non-significant 0.408 with PDP, non-significant -0.322 with CCC and non-significant -0.089 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.152 with ICP, non-significant 0.624 with RCP, significant 0.827 with PDP, non-significant -0.281 with CCC and non-significant -0.351 with CR. TABLE 5.125: Descriptive Analysis for The Crescent Textile Mills Ltd.


Return on Assets 0.033 0.014 0.018 -0.002 0.011 -0.001 0.012 0.013





Cash Conversion Cycle -88.12 116.88 -106.3 -94.43 -183.9 -105.9 -76.96 101.13

Current Ratio 1.789 1.775 1.627 1.634 1.243 1.209 1.546 0.257




203


Sales Growth 0.037 0.207 -0.249 0.186 0.097 0.585 0.144 0.271

TABLE 5.126: Quantitative Analysis for The Crescent Textile Mills Ltd.

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.105 with ICP, non-significant 0.526 with RCP, non-significant 0.016 with PDP, non-significant 0.107 with CCC and non-significant 0.567 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.779 with ICP, non-significant 0.252 with RCP, non-significant 0.734 with PDP, significant -0.909 with CCC and non-significant -0.516 with CR. TABLE 5.127: Descriptive Analysis for Al-Abid Silk Mills Ltd.


Return on Assets 0.028 0.012 0.011 0.020 0.014 0.013 0.016 0.007






204



Current Ratio 0.950 0.949 0.899 0.876 0.861 0.905 0.907 0.037



Sales Growth -0.095 -0.089 0.244 0.258 0.029 0.199 0.091 0.164

TABLE 5.128: Quantitative Analysis for Al-Abid Silk Mills Ltd.

This Correlation Matrix shows a couple of significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.798 with ICP, significant 0.831 with RCP, significant -0.828 with PDP, non-significant 0.130 with CCC and non-significant 0.302 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.285 with ICP, non-significant -0.222 with RCP, non-significant 0.280 with PDP, non-significant 0.070 with CCC and non-significant -0.776 with CR. TABLE 5.129: Descriptive Analysis for Dewan Salman Fibre Ltd.


Return on Assets 0.005 0.020 0.001 -0.004 -0.049 -0.232 -0.043 0.095



205

Operating Profit to Sales 0.058 0.052 0.031 0.033 -0.002 -0.281 -0.018 0.130





Current Ratio 0.926 0.962 0.977 0.874 0.851 0.671 0.877 0.112



Sales Growth 0.039 0.132 -0.078 -0.141 -0.102 -0.284 -0.072 0.145

TABLE 5.130: Quantitative Analysis for Dewan Salman Fibre Ltd.

This Correlation Matrix shows many significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.047 with ICP, significant -0.937 with RCP, significant -0.862 with PDP, significant 0.935 with CCC and significant 0.956 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.035 with ICP, significant -0.917 with RCP, significant -0.838 with PDP, significant 0.912 with CCC and significant 0.933 with CR.



206

TABLE 5.131: Descriptive Analysis for Gatron (Industries) Ltd.


Return on Assets 0.090 0.089 0.062 0.025 0.034 0.039 0.057 0.028





Cash Conversion Cycle -27.53 -10.62 11.31 -57.68 -40.82 -21.11 -24.41 23.93

Current Ratio 1.332 1.305 1.313 1.023 1.063 1.290 1.221 0.139



Sales Growth -0.002 0.154 -0.043 -0.146 0.283 0.136 0.064 0.156

TABLE 5.132: Quantitative Analysis for Gatron (Industries) Ltd.

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return



207

on Assets with the independent variables are; non-significant -0.477 with ICP, significant 0.860 with RCP, non-significant -0.632 with PDP, non-significant 0.560 with CCC and non-significant 0.788 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.449 with ICP, non-significant 0.719 with RCP, non-significant -0.465 with PDP, non-significant 0.360 with CCC and non-significant 0.660 with CR. TABLE 5.133: Descriptive Analysis for Ibrahim Fibres Ltd.


Return on Assets 0.055 0.067 0.015 0.099 0.086 0.088 0.068 0.031






Current Ratio 0.858 1.871 1.964 1.998 1.981 1.875 1.758 0.444



Sales Growth 0.825 0.416 -0.394 0.473 -0.051 0.320 0.265 0.428

TABLE 5.134: Quantitative Analysis for Ibrahim Fibres Ltd.



208

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.762 with ICP, non-significant -0.373 with RCP, non-significant -0.246 with PDP, non-significant -0.618 with CCC and non-significant 0.213 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.421 with ICP, non-significant -0.689 with RCP, non-significant 0.243 with PDP, significant -0.933 with CCC and non-significant 0.491 with CR. TABLE 5.135: Descriptive Analysis for Liberty Mills Ltd.


Return on Assets 0.109 0.103 0.092 0.090 0.110 0.114 0.103 0.010






Current Ratio 0.765 0.915 1.022 0.834 1.017 1.237 0.965 0.167




209


Sales Growth 0.658 -0.011 0.109 0.210 0.170 0.039 0.196 0.241

TABLE 5.136: Quantitative Analysis for Liberty Mills Ltd.

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.262 with ICP, non-significant -0.060 with RCP, significant -0.934 with PDP, non-significant 0.338 with CCC and non-significant 0.388 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.557 with ICP, non-significant 0.354 with RCP, non-significant -0.596 with PDP, non-significant 0.810 with CCC and significant 0.878 with CR. TABLE 5.137: Descriptive Analysis for Rupali Polyester Ltd.


Return on Assets 0.061 0.136 0.110 0.070 0.061 0.078 0.086 0.030






210



Current Ratio 6.158 4.882 8.269 8.432 2.630 3.751 5.687 2.373



Sales Growth 0.053 0.242 0.091 -0.145 0.168 0.027 0.073 0.133

TABLE 5.138: Quantitative Analysis for Rupali Polyester Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.146 with ICP, non-significant -0.398 with RCP, non-significant -0.320 with PDP, non-significant 0.034 with CCC and non-significant 0.160 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.062 with ICP, non-significant -0.238 with RCP, non-significant -0.311 with PDP, non-significant 0.079 with CCC and non-significant 0.133 with CR. TABLE 5.139: Descriptive Analysis for Abbott Laboratories (Pakistan) Ltd.


Return on Assets 0.277 0.321 0.331 0.286 0.378 0.109 0.284 0.093



211






Current Ratio 2.911 4.603 4.511 4.535 3.190 2.387 3.690 0.977



Sales Growth 0.038 0.085 0.110 0.142 0.120 0.079 0.096 0.037

TABLE 5.140: Quantitative Analysis for Abbott Laboratories (Pakistan) Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.278 with ICP, non-significant 0.136 with RCP, non-significant -0.628 with PDP, non-significant 0.503 with CCC and non-significant 0.574 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.434 with ICP, non-significant 0.372 with



212

RCP, non-significant -0.687 with PDP, non-significant 0.656 with CCC and non-significant 0.715 with CR. TABLE 5.141: Descriptive Analysis for Berger Paints Pakistan Ltd.


Return on Assets 0.071 0.073 0.069 0.089 0.057 -0.081 0.046 0.063






Current Ratio 1.395 1.312 1.076 0.989 0.957 0.957 1.114 0.192



Sales Growth 0.153 0.269 0.667 0.338 0.207 0.102 0.289 0.203

TABLE 5.142: Quantitative Analysis for Berger Paints Pakistan Ltd.



213

This Correlation Matrix shows a significant negative association between the profitability measures and the PDP. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.495 with ICP, non-significant 0.522 with RCP, significant -0.913 with PDP, non-significant 0.810 with CCC and non-significant 0.401 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.589 with ICP, non-significant 0.622 with RCP, significant -0.896 with PDP, non-significant 0.780 with CCC and non-significant 0.407 with CR. TABLE 5.143: Descriptive Analysis for Clariant Pakistan Ltd.


Return on Assets 0.176 0.186 0.195 0.181 0.156 0.157 0.175 0.016






Current Ratio 1.441 1.557 1.575 1.903 1.519 1.577 1.595 0.159



Sales Growth 0.114 0.158 0.103 0.007 0.135 0.219 0.123 0.070

TABLE 5.144: Quantitative Analysis for Clariant Pakistan Ltd.



214

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.046 with ICP, non-significant -0.001 with RCP, non-significant -0.411 with PDP, non-significant 0.447 with CCC and non-significant 0.211 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.344 with ICP, non-significant -0.669 with RCP, non-significant -0.238 with PDP, non-significant 0.268 with CCC and non-significant 0.480 with CR. TABLE 5.145: Descriptive Analysis for Colgate-Palmolive (Pakistan) Ltd.


Return on Assets 0.265 0.310 0.310 0.368 0.341 0.327 0.320 0.035





Cash Conversion Cycle -3.52 -22.94 7.35 -8.56 -3.55 7.98 -3.87 11.42

Current Ratio 1.562 1.338 1.689 1.679 1.886 2.174 1.721 0.285




215


Sales Growth 0.235 0.212 0.164 0.287 0.184 0.206 0.215 0.043

TABLE 5.146: Quantitative Analysis for Colgate-Palmolive (Pakistan) Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.418 with ICP, non-significant -0.233 with RCP, non-significant 0.110 with PDP, non-significant -0.038 with CCC and non-significant 0.354 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.507 with ICP, non-significant -0.272 with RCP, non-significant 0.186 with PDP, non-significant -0.080 with CCC and non-significant 0.439 with CR. TABLE 5.147: Descriptive Analysis for Dawood Hercules Chemicals Ltd.


Return on Assets 0.186 0.094 0.279 0.160 0.381 0.080 0.197 0.115






216



Current Ratio 3.230 3.089 3.584 2.150 7.265 2.938 3.709 1.806



Sales Growth 0.064 -0.101 0.202 0.167 0.279 0.383 0.166 0.169

TABLE 5.148: Quantitative Analysis for Dawood Hercules Chemicals Ltd.

This Correlation Matrix shows a blend of significant and insignificant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; significant 0.875 with ICP, non-significant -0.502 with RCP, non-significant -0.710 with PDP, non-significant 0.781 with CCC and significant 0.828 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; significant 0.979 with ICP, non-significant -0.395 with RCP, non-significant -0.559 with PDP, non-significant 0.658 with CCC and significant 0.923 with CR. TABLE 5.149: Descriptive Analysis for Engro Chemical Pakistan Ltd.


Return on Assets 0.211 0.213 0.231 0.216 0.104 0.086 0.177 0.064



217






Current Ratio 1.971 1.545 1.920 1.955 3.338 2.833 2.260 0.677



Sales Growth -0.007 0.062 0.435 0.017 0.920 0.181 0.268 0.358

TABLE 5.150: Quantitative Analysis for Engro Chemical Pakistan Ltd.

This Correlation Matrix also exhibits a mixture of significant and insignificant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.483 with ICP, non-significant 0.564 with RCP, non-significant 0.487 with PDP, non-significant -0.476 with CCC and significant -0.907 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.663 with ICP, non-significant 0.561 with



218

RCP, significant 0.845 with PDP, significant -0.813 with CCC and significant -0.882 with CR. TABLE 5.151: Descriptive Analysis for Fauji Fertilizer Bin Qasim Ltd.


Return on Assets 0.020 0.098 0.159 0.136 0.134 0.094 0.107 0.049






Current Ratio 0.290 0.604 0.677 0.727 0.649 0.869 0.636 0.192



Sales Growth 0.306 1.084 0.219 0.033 -0.165 1.082 0.427 0.534

TABLE 5.152: Quantitative Analysis for Fauji Fertilizer Bin Qasim Ltd.



219

This Correlation Matrix shows a significant negative correlation between the profitability measures and the RCP. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.050 with ICP, significant -0.886 with RCP, non-significant -0.382 with PDP, non-significant 0.353 with CCC and non-significant 0.686 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.314 with ICP, significant -0.873 with RCP, non-significant 0.092 with PDP, non-significant -0.063 with CCC and non-significant 0.756 with CR. TABLE 5.153: Descriptive Analysis for Fauji Fertilizer Company Ltd.


Return on Assets 0.196 0.315 0.380 0.383 0.376 0.455 0.351 0.088






Current Ratio 1.939 1.412 1.198 1.224 1.249 1.236 1.376 0.286



Sales Growth 0.547 0.322 0.089 0.118 -0.163 0.412 0.221 0.256

TABLE 5.154: Quantitative Analysis for Fauji Fertilizer Company Ltd.



220

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.471 with ICP, significant -0.895 with RCP, non-significant 0.346 with PDP, non-significant -0.615 with CCC and significant 0.926 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.363 with ICP, non-significant -0.589 with RCP, non-significant 0.560 with PDP, non-significant -0.723 with CCC and non-significant -0.719 with CR. TABLE 5.155: Descriptive Analysis for Glaxosmithkline (Pakistan) Ltd.


Return on Assets 0.263 0.309 0.326 0.279 0.262 0.282 0.287 0.026






Current Ratio 2.888 4.830 5.129 4.022 3.873 3.616 4.060 0.818




221


Sales Growth 0.122 0.096 0.062 0.072 0.053 0.269 0.112 0.081

TABLE 5.156: Quantitative Analysis for Glaxosmithkline (Pakistan) Ltd.

This Correlation Matrix shows a significant association between the profitability measures and the CR. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.054 with ICP, non-significant -0.157 with RCP, non-significant -0.805 with PDP, non-significant 0.470 with CCC and significant 0.895 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.357 with ICP, non-significant -0.256 with RCP, non-significant -0.276 with PDP, non-significant 0.200 with CCC and significant 0.837 with CR. TABLE 5.157: Descriptive Analysis for ICI Pakistan Ltd.


Return on Assets -0.048 0.337 0.110 0.117 0.139 0.159 0.136 0.123






222



Current Ratio 0.944 1.590 1.885 1.537 1.604 1.853 1.569 0.339



Sales Growth 0.467 -0.039 -0.009 0.039 0.187 0.229 0.146 0.190

TABLE 5.158: Quantitative Analysis for ICI Pakistan Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.730 with ICP, non-significant 0.732 with RCP, non-significant -0.582 with PDP, non-significant 0.739 with CCC and non-significant 0.567 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.764 with ICP, non-significant 0.765 with RCP, non-significant -0.502 with PDP, non-significant 0.678 with CCC and non-significant 0.509 with CR. TABLE 5.159: Descriptive Analysis for Pakistan PTA Ltd.


Return on Assets -0.295 0.072 0.081 0.020 0.012 -0.110 -0.037 0.144



223






Current Ratio 0.317 0.396 0.542 0.540 0.924 0.494 0.536 0.210



Sales Growth 0.219 0.307 0.055 0.084 0.023 0.141 0.138 0.108

TABLE 5.160: Quantitative Analysis for Pakistan PTA Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.447 with ICP, non-significant 0.158 with RCP, non-significant -0.526 with PDP, non-significant 0.652 with CCC and non-significant 0.426 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.318 with ICP, non-significant 0.179 with



224

RCP, non-significant -0.622 with PDP, non-significant 0.720 with CCC and non-significant 0.445 with CR. TABLE 5.161: Descriptive Analysis for Sanofi Aventis (Aventis Pharma)


Return on Assets 0.147 0.258 0.189 0.179 0.052 0.028 0.142 0.087





Cash Conversion Cycle -96.82 2.70 -3.29 3.34 -15.69 -64.85 -29.10 41.89

Current Ratio 0.988 1.426 1.290 1.475 1.245 0.957 1.230 0.217



Sales Growth 0.628 0.096 0.099 0.127 0.013 0.112 0.179 0.223

TABLE 5.162: Quantitative Analysis for Sanofi Aventis (Aventis Pharma)



225

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.181 with ICP, non-significant -0.720 with RCP, non-significant -0.650 with PDP, non-significant 0.472 with CCC and non-significant 0.667 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.024 with ICP, non-significant -0.691 with RCP, non-significant -0.489 with PDP, non-significant 0.444 with CCC and non-significant 0.617 with CR. TABLE 5.163: Descriptive Analysis for Searle Pakistan Ltd.


Return on Assets 0.052 0.086 0.068 0.083 0.058 0.111 0.076 0.022






Current Ratio 1.473 1.307 1.330 1.693 1.507 1.689 1.500 0.167



Sales Growth 0.005 0.053 0.220 0.310 -0.039 0.045 0.099 0.136

TABLE 5.164: Quantitative Analysis for Searle Pakistan Ltd.



226

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.252 with ICP, non-significant -0.158 with RCP, non-significant -0.456 with PDP, non-significant 0.383 with CCC and non-significant 0.438 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.036 with ICP, non-significant 0.262 with RCP, non-significant 0.295 with PDP, non-significant -0.273 with CCC and non-significant -0.029 with CR. TABLE 5.165: Descriptive Analysis for Sitara Chemical Industries Ltd.


Return on Assets 0.100 0.121 0.135 0.067 0.084 0.105 0.102 0.025






Current Ratio 0.782 0.788 0.798 0.852 0.834 1.149 0.867 0.141




227


Sales Growth 0.085 0.106 0.285 -0.044 0.151 0.260 0.141 0.121

TABLE 5.166: Quantitative Analysis for Sitara Chemical Industries Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.351 with ICP, non-significant -0.605 with RCP, non-significant -0.630 with PDP, non-significant 0.596 with CCC and non-significant -0.095 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.189 with ICP, non-significant 0.344 with RCP, non-significant 0.529 with PDP, non-significant -0.547 with CCC and non-significant 0.715 with CR. TABLE 5.167: Descriptive Analysis for Al-Ghazi Tractors Ltd.


Return on Assets 0.459 0.355 0.226 0.262 0.280 0.238 0.303 0.089






228



Current Ratio 2.465 2.702 1.719 1.884 2.212 2.577 2.260 0.394



Sales Growth 0.523 0.235 0.148 0.165 0.007 0.112 0.198 0.176

TABLE 5.168: Quantitative Analysis for Al-Ghazi Tractors Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.404 with ICP, non-significant 0.554 with RCP, non-significant -0.527 with PDP, non-significant 0.440 with CCC and non-significant 0.530 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.811 with ICP, non-significant 0.386 with RCP, non-significant -0.095 with PDP, non-significant -0.149 with CCC and non-significant -0.016 with CR. TABLE 5.169: Descriptive Analysis for Atlas Honda Ltd.


Return on Assets 0.245 0.205 0.155 0.138 0.100 0.116 0.160 0.055



229






Current Ratio 1.463 1.239 1.373 1.186 1.125 1.154 1.257 0.134



Sales Growth 0.268 0.421 0.471 0.219 -0.046 0.240 0.262 0.182

TABLE 5.170: Quantitative Analysis for Atlas Honda Ltd.

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.180 with ICP, significant -0.872 with RCP, non-significant 0.026 with PDP, non-significant -0.063 with CCC and significant 0.815 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.161 with ICP, significant -0.866 with RCP,



230

non-significant 0.167 with PDP, non-significant -0.169 with CCC and non-significant 0.747 with CR. TABLE 5.171: Descriptive Analysis for Crescent Steel & Allied Products Ltd.


Return on Assets 0.261 0.147 0.166 0.071 0.155 0.129 0.155 0.062






Current Ratio 4.028 4.599 4.469 2.103 2.968 2.145 3.385 1.133



Sales Growth 0.344 -0.112 0.995 -0.396 0.713 0.456 0.333 0.515

TABLE 5.172: Quantitative Analysis for Crescent Steel & Allied Products Ltd.



231

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.549 with ICP, non-significant -0.444 with RCP, significant -0.819 with PDP, significant 0.844 with CCC and non-significant 0.600 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.481 with ICP, non-significant 0.145 with RCP, non-significant -0.009 with PDP, non-significant 0.301 with CCC and non-significant 0.099 with CR. TABLE 5.173: Descriptive Analysis for Dewan Farooque Motors Ltd.


Return on Assets 0.060 0.065 0.081 0.041 0.014 -0.099 0.027 0.066






Current Ratio 0.725 0.798 0.965 0.996 0.938 0.899 0.887 0.105



Sales Growth 0.118 0.389 0.339 0.033 -0.194 -0.262 0.071 0.267

TABLE 5.174: Quantitative Analysis for Dewan Farooque Motors Ltd.



232

This Correlation Matrix shows a significant association between the profitability measures and the CCC. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.185 with ICP, non-significant -0.277 with RCP, non-significant -0.794 with PDP, significant 0.935 with CCC and non-significant -0.150 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.064 with ICP, non-significant -0.019 with RCP, non-significant -0.732 with PDP, significant 0.911 with CCC and non-significant -0.144 with CR. TABLE 5.175: Descriptive Analysis for General Tyre & Rubber Co. Ltd.


Return on Assets 0.201 0.191 0.122 0.062 0.030 0.002 0.101 0.084





Cash Conversion Cycle -6.70 42.14 28.16 -10.16 -39.64 -59.68 -7.65 38.72

Current Ratio 1.668 2.262 1.848 1.309 1.065 0.945 1.516 0.502




233


Sales Growth 0.154 0.254 0.132 0.169 0.065 0.177 0.159 0.062

TABLE 5.176: Quantitative Analysis for General Tyre & Rubber Co. Ltd.

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.505 with ICP, non-significant -0.393 with RCP, significant -0.813 with PDP, non-significant 0.794 with CCC and significant 0.886 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.549 with ICP, non-significant -0.461 with RCP, non-significant -0.790 with PDP, non-significant 0.778 with CCC and significant 0.856 with CR. TABLE 5.177: Descriptive Analysis for Ghandhara Nissan Ltd.


Return on Assets 0.539 0.062 0.103 0.137 0.119 0.090 0.175 0.180






234


Cash Conversion Cycle -2439 -77.59 1.63 -2.05 -70.57 -42.15 -438.3 980.76

Current Ratio 0.177 1.005 1.213 1.125 1.147 1.332 1.000 0.417



Sales Growth 0.231 11.187 2.431 0.273 -0.418 0.300 2.334 4.444

TABLE 5.178: Quantitative Analysis for Ghandhara Nissan Ltd.

This Correlation Matrix shows many significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.144 with ICP, non-significant -0.234 with RCP, significant 0.984 with PDP, significant -0.987 with CCC and significant -0.949 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.232 with ICP, non-significant -0.254 with RCP, significant 1.000 with PDP, significant -1.000 with CCC and significant -0.969 with CR. TABLE 5.179: Descriptive Analysis for Hinopak Motors Ltd.


Return on Assets 0.182 0.146 0.121 0.124 0.184 0.023 0.130 0.059



235





Cash Conversion Cycle -35.45 -3.83 21.81 23.13 25.44 11.59 7.12 23.49

Current Ratio 1.146 1.332 1.385 1.352 1.469 1.324 1.335 0.106



Sales Growth 0.386 0.477 0.167 -0.026 0.133 0.548 0.281 0.224

TABLE 5.180: Quantitative Analysis for Hinopak Motors Ltd.

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; significant 0.860 with ICP, non-significant 0.221 with RCP, non-significant 0.700 with PDP, non-significant -0.304 with CCC and non-significant -0.064 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.736 with ICP, non-significant 0.761 with



236

RCP, significant 0.900 with PDP, non-significant -0.521 with CCC and non-significant -0.316 with CR. TABLE 5.181: Descriptive Analysis for Honda Atlas Cars (Pakistan) Ltd.


Return on Assets 0.162 0.089 0.022 0.124 -0.058 0.009 0.058 0.082

Operating Profit to Sales 0.095 0.065 0.016 0.039 -0.009 0.017 0.037 0.038





Current Ratio 1.956 1.263 1.144 1.175 1.015 0.909 1.244 0.371



Sales Growth -0.249 0.908 0.773 0.775 -0.335 -0.133 0.290 0.585

TABLE 5.182: Quantitative Analysis for Honda Atlas Cars (Pakistan) Ltd.



237

This Correlation Matrix shows only one significant association between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.574 with ICP, non-significant 0.105 with PDP, non-significant 0.031 with CCC and non-significant 0.772 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.689 with ICP, non-significant 0.219 with PDP, non-significant -0.070 with CCC and significant 0.873 with CR. TABLE 5.183: Descriptive Analysis for Indus Motor Company Ltd.


Return on Assets 0.175 0.196 0.189 0.258 0.270 0.258 0.224 0.042






Current Ratio 1.187 1.317 1.460 1.475 1.781 2.253 1.579 0.385



Sales Growth 0.933 0.439 0.411 0.277 0.110 0.066 0.373 0.314

TABLE 5.184: Quantitative Analysis for Indus Motor Company Ltd.



238

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; significant -0.817 with ICP, non-significant -0.238 with RCP, non-significant -0.793 with PDP, non-significant 0.775 with CCC and non-significant 0.733 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.674 with ICP, non-significant 0.501 with RCP, significant 0.863 with PDP, significant -0.872 with CCC and non-significant -0.709 with CR. TABLE 5.185: Descriptive Analysis for International Industries Ltd.


Return on Assets 0.101 0.123 0.102 0.138 0.094 0.085 0.107 0.020





Cash Conversion Cycle -39.10 -13.16 7.46 -20.98 -41.44 3.57 -17.27 20.67

Current Ratio 1.065 1.074 1.133 1.146 1.127 1.131 1.113 0.034




239


Sales Growth 0.260 0.313 0.622 0.079 0.263 0.249 0.298 0.178

TABLE 5.186: Quantitative Analysis for International Industries Ltd.

This Correlation Matrix shows no significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.092 with ICP, non-significant -0.437 with RCP, non-significant -0.119 with PDP, non-significant -0.092 with CCC and non-significant 0.003 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.391 with ICP, non-significant 0.244 with RCP, non-significant 0.630 with PDP, non-significant -0.425 with CCC and non-significant -0.345 with CR. TABLE 5.187: Descriptive Analysis for Millat Tractors Ltd.


Return on Assets 0.165 0.168 0.114 0.144 0.138 0.158 0.148 0.020






240



Current Ratio 1.697 1.643 1.415 1.438 1.579 1.602 1.562 0.113



Sales Growth 0.028 0.317 0.198 0.172 0.128 0.026 0.145 0.111

TABLE 5.188: Quantitative Analysis for Millat Tractors Ltd.

This Correlation Matrix shows a few significant associations between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.698 with ICP, non-significant 0.122 with RCP, non-significant -0.733 with PDP, non-significant 0.542 with CCC and significant 0.842 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.092 with ICP, significant -0.892 with RCP, non-significant 0.538 with PDP, non-significant -0.744 with CCC and non-significant -0.342 with CR. TABLE 5.189: Descriptive Analysis for Pak Elektron Ltd.


Return on Assets 0.029 0.036 0.057 0.054 0.065 0.040 0.047 0.014



241






Current Ratio 0.908 0.896 1.070 0.974 1.157 1.168 1.029 0.121



Sales Growth 0.134 0.541 0.329 0.367 0.184 0.065 0.270 0.176

TABLE 5.190: Quantitative Analysis for Pak Elektron Ltd.

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.353 with ICP, non-significant 0.279 with RCP, non-significant -0.780 with PDP, non-significant 0.726 with CCC and non-significant 0.596 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.533 with ICP, non-significant 0.259 with



242

RCP, non-significant -0.033 with PDP, non-significant -0.102 with CCC and non-significant 0.338 with CR. TABLE 5.191: Descriptive Analysis for Pak Suzuki Motor Company Ltd.


Return on Assets 0.251 0.159 0.189 0.236 0.206 0.060 0.184 0.069





Cash Conversion Cycle -72.69 -56.67 -56.91 -15.55 13.87 39.95 -24.67 44.97

Current Ratio 1.545 1.409 1.408 1.643 2.278 4.278 2.094 1.118



Sales Growth 0.681 0.521 0.443 0.140 0.287 -0.206 0.311 0.315

TABLE 5.192: Quantitative Analysis for Pak Suzuki Motor Company Ltd.



243

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.169 with ICP, non-significant -0.515 with RCP, non-significant 0.701 with PDP, non-significant -0.599 with CCC and significant -0.814 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.128 with ICP, non-significant -0.438 with RCP, significant 0.843 with PDP, non-significant -0.736 with CCC and significant -0.831 with CR. TABLE 5.193: Descriptive Analysis for Pakistan Cables Ltd.


Return on Assets 0.112 0.110 0.094 0.096 0.098 0.016 0.088 0.036





Cash Conversion Cycle -2.25 8.17 -3.66 -33.55 -10.22 -31.86 -12.23 16.93

Current Ratio 1.225 1.219 1.105 1.078 1.043 0.980 1.108 0.097



Sales Growth 0.202 0.334 0.813 0.496 0.378 -0.077 0.358 0.297

TABLE 5.194: Quantitative Analysis for Pakistan Cables Ltd.



244

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.632 with ICP, non-significant 0.709 with RCP, non-significant 0.525 with PDP, non-significant 0.659 with CCC and non-significant 0.775 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.463 with ICP, non-significant 0.451 with RCP, non-significant 0.468 with PDP, non-significant 0.336 with CCC and non-significant 0.511 with CR. TABLE 5.195: Descriptive Analysis for Siemens (Pakistan) Engineering Co. Ltd.


Return on Assets 0.145 0.154 0.157 0.125 0.112 0.104 0.133 0.022






Current Ratio 1.525 1.560 1.339 1.210 1.312 1.254 1.367 0.144




245


Sales Growth 0.216 0.284 0.766 0.570 0.059 0.225 0.353 0.262

TABLE 5.196: Quantitative Analysis for Siemens (Pakistan) Engineering Co. Ltd.

This Correlation Matrix reveals a few significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.110 with ICP, significant -0.965 with RCP, significant -0.890 with PDP, non-significant 0.032 with CCC and non-significant 0.681 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.299 with ICP, non-significant -0.079 with RCP, non-significant 0.106 with PDP, non-significant 0.082 with CCC and non-significant 0.743 with CR. TABLE 5.197: Descriptive Analysis for Dewan Sugar Mills Ltd.


Return on Assets -0.028 0.017 0.009 0.019 -0.050 -0.107 -0.023 0.049






246



Current Ratio 1.096 0.823 0.847 0.670 0.619 0.526 0.764 0.204



Sales Growth 0.626 -0.527 2.856 1.196 -0.332 0.277 0.683 1.237

TABLE 5.198: Quantitative Analysis for Dewan Sugar Mills Ltd.

This Correlation Matrix shows a few significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.502 with ICP, non-significant -0.729 with RCP, non-significant 0.401 with PDP, non-significant -0.415 with CCC and non-significant 0.464 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; significant 0.897 with ICP, non-significant -0.229 with RCP, significant 0.877 with PDP, significant -0.877 with CCC and non-significant 0.403 with CR. TABLE 5.199: Descriptive Analysis for Habib Sugar Mills Ltd.


Return on Assets 0.039 0.099 0.103 0.109 0.087 0.150 0.098 0.036



247






Current Ratio 1.374 1.513 1.198 2.135 2.354 1.936 1.752 0.458



Sales Growth -0.365 1.288 0.364 0.308 -0.294 0.582 0.314 0.609

TABLE 5.200: Quantitative Analysis for Habib Sugar Mills Ltd.

This Correlation Matrix reveals only one significant relationship between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; significant -0.872 with ICP, non-significant -0.644 with RCP, non-significant -0.797 with PDP, non-significant 0.616 with CCC and non-significant 0.321 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.623 with ICP, non-significant -0.244 with



248

RCP, non-significant -0.447 with PDP, non-significant 0.192 with CCC and non-significant 0.533 with CR. TABLE 5.201: Descriptive Analysis for JDW Sugar Mills Ltd.


Return on Assets 0.127 0.108 0.100 0.055 0.008 0.100 0.083 0.044






Current Ratio 0.847 1.365 0.896 1.248 1.119 1.229 1.117 0.206



Sales Growth 0.478 0.068 0.553 1.032 -0.053 1.017 0.516 0.457

TABLE 5.202: Quantitative Analysis for JDW Sugar Mills Ltd.



249

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.528 with ICP, non-significant -0.507 with RCP, non-significant -0.511 with PDP, non-significant 0.424 with CCC and non-significant -0.252 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.343 with ICP, non-significant 0.274 with RCP, non-significant 0.352 with PDP, non-significant -0.483 with CCC and non-significant -0.031 with CR. TABLE 5.203: Descriptive Analysis for Shakarganj Mills Ltd.


Return on Assets 0.060 0.035 0.018 -0.024 0.083 -0.079 0.016 0.059






Current Ratio 1.000 1.309 1.123 0.933 1.082 0.857 1.051 0.159



Sales Growth -0.200 0.650 0.414 0.068 0.165 0.257 0.226 0.292

TABLE 5.204: Quantitative Analysis for Shakarganj Mills Ltd.



250

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.374 with ICP, non-significant -0.639 with RCP, non-significant -0.490 with PDP, non-significant 0.748 with CCC and non-significant 0.596 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.216 with ICP, non-significant -0.773 with RCP, non-significant -0.390 with PDP, non-significant 0.524 with CCC and non-significant 0.324 with CR. TABLE 5.205: Descriptive Analysis for Century Paper & Board Mills Ltd.


Return on Assets 0.203 0.158 0.132 0.069 0.013 0.003 0.096 0.081






Current Ratio 1.551 0.812 0.885 0.902 0.330 0.510 0.832 0.420




251


Sales Growth 0.054 0.085 0.146 0.113 0.149 0.141 0.115 0.039

TABLE 5.206: Quantitative Analysis for Century Paper & Board Mills Ltd.

This Correlation Matrix portrays too many significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.642 with ICP, significant -0.930 with RCP, significant -0.890 with PDP, significant 0.898 with CCC and significant 0.866 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.735 with ICP, significant -0.966 with RCP, significant -0.962 with PDP, significant 0.959 with CCC and significant 0.886 with CR. TABLE 5.207: Descriptive Analysis for Packages Ltd.


Return on Assets 0.219 0.156 0.114 0.272 0.166 -0.009 0.153 0.096



Receivable 30.66 39.06 35.04 29.93 40.15 38.69 35.59 4.45



252

Collection Period Payable Deferral Period 188.83 177.28 153.69 129.94 104.73 176.46 155.16 32.43

Cash Conversion Cycle -102.2 -49.03 -57.33 -28.68 14.52 -37.97 -43.44 38.15

Current Ratio 1.004 1.498 1.867 3.146 5.220 2.411 2.524 1.514



Sales Growth 0.280 0.005 0.184 0.225 0.169 0.224 0.181 0.095

TABLE 5.208: Quantitative Analysis for Packages Ltd.

This Correlation Matrix shows only one significant relationship between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.632 with ICP, non-significant -0.657 with RCP, non-significant -0.305 with PDP, non-significant -0.094 with CCC and non-significant 0.068 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.223 with ICP, non-significant -0.310 with RCP, significant -0.817 with PDP, non-significant 0.561 with CCC and non-significant 0.683 with CR. TABLE 5.209: Descriptive Analysis for Bestway Cement Ltd.




253

Return on Assets 0.024 0.155 0.144 0.096 0.002 -0.016 0.068 0.074






Current Ratio 1.222 1.974 1.731 1.901 1.920 1.624 1.729 0.281



Sales Growth 0.058 0.270 0.291 0.250 0.372 0.269 0.252 0.104

TABLE 5.210: Quantitative Analysis for Bestway Cement Ltd.

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.720 with ICP, non-significant -0.509 with RCP, non-significant -0.138 with PDP, non-significant 0.050 with CCC and non-significant 0.431 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.782 with ICP, non-significant -0.583 with



254

RCP, non-significant 0.154 with PDP, non-significant -0.243 with CCC and non-significant 0.522 with CR. TABLE 5.211: Descriptive Analysis for Cherat Cement Company Ltd.


Return on Assets 0.013 0.263 0.214 0.199 0.070 -0.013 0.124 0.116






Current Ratio 1.045 1.224 2.245 1.581 1.555 1.009 1.443 0.462



Sales Growth 0.054 0.039 0.299 -0.061 0.146 0.125 0.100 0.122

TABLE 5.212: Quantitative Analysis for Cherat Cement Company Ltd.



255

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.283 with ICP, non-significant 0.118 with RCP, non-significant 0.022 with PDP, non-significant 0.029 with CCC and non-significant 0.559 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.430 with ICP, non-significant 0.114 with RCP, non-significant 0.031 with PDP, non-significant 0.047 with CCC and non-significant 0.609 with CR. TABLE 5.213: Descriptive Analysis for D.G. Khan Cement Company Ltd.


Return on Assets 0.037 0.099 0.118 0.101 0.033 -0.003 0.064 0.048






Current Ratio 2.007 1.535 1.955 1.929 3.020 1.964 2.068 0.497



Sales Growth 0.144 0.106 0.294 0.486 -0.142 0.859 0.291 0.348

TABLE 5.214: Quantitative Analysis for D.G. Khan Cement Company Ltd.



256

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.072 with ICP, non-significant -0.537 with RCP, non-significant -0.097 with PDP, non-significant 0.088 with CCC and non-significant -0.422 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.165 with ICP, non-significant -0.266 with RCP, non-significant 0.310 with PDP, non-significant -0.327 with CCC and non-significant -0.038 with CR. TABLE 5.215: Descriptive Analysis for Dewan Cement Ltd. (Pakland Cement Ltd.)


Return on Assets 0.008 -0.044 0.016 0.058 0.007 -0.027 0.003 0.036

Operating Profit to Sales 0.065 -0.133 0.127 0.197 0.114 -0.039 0.055 0.121





Current Ratio 1.382 0.746 0.836 0.925 0.444 0.238 0.762 0.398




257


Sales Growth 0.068 0.169 0.356 0.364 0.677 0.045 0.280 0.238

TABLE 5.216: Quantitative Analysis for Dewan Cement Ltd. (Pakland Cement Ltd.)

This Correlation Matrix reveals only one significant relationship between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.806 with ICP, non-significant -0.276 with RCP, non-significant -0.203 with PDP, non-significant 0.312 with CCC and non-significant 0.398 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; significant 0.863 with ICP, non-significant -0.115 with RCP, non-significant 0.007 with PDP, non-significant 0.096 with CCC and non-significant 0.283 with CR. TABLE 5.217: Descriptive Analysis for Fauji Cement Company Ltd.


Return on Assets -0.094 -0.041 0.122 0.287 0.123 0.036 0.072 0.136

Operating Profit to Sales -0.024 -0.012 0.252 0.359 0.208 0.127 0.152 0.151





258



Current Ratio 1.888 3.174 1.248 1.103 1.122 1.879 1.736 0.791



Sales Growth -0.033 0.305 0.208 0.449 -0.159 -0.006 0.127 0.231

TABLE 5.218: Quantitative Analysis for Fauji Cement Company Ltd.

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.386 with ICP, non-significant -0.377 with RCP, non-significant 0.452 with PDP, non-significant -0.459 with CCC and non-significant -0.714 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.362 with ICP, non-significant -0.262 with RCP, non-significant 0.537 with PDP, non-significant -0.544 with CCC and non-significant -0.803 with CR. TABLE 5.219: Descriptive Analysis for Fecto Cement Ltd.


Return on Assets -0.090 0.110 0.200 0.324 0.014 -0.053 0.084 0.159



259






Current Ratio 0.706 0.762 1.075 1.491 1.348 1.075 1.076 0.310



Sales Growth 0.083 0.113 0.262 0.301 -0.057 0.053 0.126 0.134

TABLE 5.220: Quantitative Analysis for Fecto Cement Ltd.

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.477 with ICP, non-significant -0.042 with RCP, non-significant -0.365 with PDP, non-significant 0.291 with CCC and non-significant 0.556 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.469 with ICP, non-significant 0.068 with



260

RCP, non-significant -0.391 with PDP, non-significant 0.330 with CCC and non-significant 0.569 with CR. TABLE 5.221: Descriptive Analysis for Lucky Cement Ltd.


Return on Assets 0.071 0.138 0.082 0.108 0.105 0.067 0.095 0.027






Current Ratio 0.596 1.313 0.435 0.697 0.672 0.940 0.776 0.310



Sales Growth 0.170 0.121 0.304 0.924 0.552 0.252 0.387 0.303

TABLE 5.222: Quantitative Analysis for Lucky Cement Ltd.



261

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.736 with ICP, non-significant -0.250 with RCP, non-significant 0.209 with PDP, non-significant -0.186 with CCC and non-significant 0.601 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.469 with ICP, non-significant -0.211 with RCP, non-significant 0.751 with PDP, non-significant -0.751 with CCC and non-significant 0.087 with CR. TABLE 5.223: Descriptive Analysis for Maple Leaf Cement Factory Ltd.


Return on Assets -0.013 0.106 0.099 0.087 -0.006 -0.052 0.037 0.068






Current Ratio 1.339 1.040 1.014 0.767 0.834 0.798 0.965 0.215



Sales Growth -0.049 0.234 0.247 0.284 -0.307 0.914 0.221 0.409

TABLE 5.224: Quantitative Analysis for Maple Leaf Cement Factory Ltd.



262

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.465 with ICP, non-significant -0.800 with RCP, non-significant -0.542 with PDP, non-significant 0.504 with CCC and non-significant 0.001 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.621 with ICP, non-significant -0.697 with RCP, non-significant -0.570 with PDP, non-significant 0.534 with CCC and non-significant -0.044 with CR. TABLE 5.225: Descriptive Analysis for Pioneer Cement Ltd.


Return on Assets -0.038 0.056 0.057 0.111 -0.021 -0.055 0.018 0.066






Current Ratio 0.893 0.383 0.233 0.264 0.206 0.231 0.368 0.265




263


Sales Growth 0.102 0.089 0.430 0.483 0.119 0.421 0.274 0.188

TABLE 5.226: Quantitative Analysis for Pioneer Cement Ltd.

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.531 with ICP, non-significant -0.355 with RCP, non-significant 0.479 with PDP, non-significant -0.472 with CCC and non-significant -0.316 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.550 with ICP, non-significant -0.303 with RCP, non-significant 0.447 with PDP, non-significant -0.438 with CCC and non-significant -0.265 with CR. TABLE 5.227: Descriptive Analysis for Attock Refinery Ltd.


Return on Assets 0.058 0.063 0.119 0.015 0.010 0.058 0.054 0.039






264



Current Ratio 0.938 0.999 1.107 1.258 1.103 1.226 1.105 0.124



Sales Growth 0.105 0.085 0.609 0.474 0.062 0.260 0.266 0.229

TABLE 5.228: Quantitative Analysis for Attock Refinery Ltd.

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.226 with ICP, non-significant 0.341 with RCP, non-significant -0.157 with PDP, non-significant 0.261 with CCC and non-significant -0.281 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.071 with ICP, non-significant 0.474 with RCP, non-significant 0.266 with PDP, non-significant -0.177 with CCC and non-significant 0.067 with CR. TABLE 5.229: Descriptive Analysis for Japan Power Generation Ltd.


Return on Assets -0.046 -0.014 -0.014 -0.038 -0.031 -0.023 -0.028 0.013



265






Current Ratio 0.662 0.657 0.589 0.952 0.934 0.983 0.796 0.178



Sales Growth 0.160 -0.111 0.087 0.602 0.143 0.120 0.167 0.235

TABLE 5.230: Quantitative Analysis for Japan Power Generation Ltd.

This Correlation Matrix shows a couple of significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.159 with ICP, non-significant -0.321 with RCP, non-significant 0.356 with PDP, non-significant -0.394 with CCC and non-significant -0.299 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.438 with ICP, significant -0.859 with RCP,



266

non-significant 0.380 with PDP, non-significant -0.775 with CCC and significant -0.935 with CR. TABLE 5.231: Descriptive Analysis for Karachi Electric Supply Corporation Ltd.


Return on Assets -0.125 0.020 -0.198 -0.108 -0.155 -0.169 -0.123 0.077






Current Ratio 0.963 1.462 0.829 0.647 0.487 0.373 0.794 0.392



Sales Growth 0.187 0.031 0.000 0.078 0.078 0.110 0.081 0.065

TABLE 5.232: Quantitative Analysis for Karachi Electric Supply Corporation Ltd.



267

This Correlation Matrix reveals only one significant relationship between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.207 with ICP, non-significant 0.133 with RCP, non-significant -0.483 with PDP, non-significant 0.483 with CCC and non-significant 0.794 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.208 with ICP, non-significant 0.155 with RCP, non-significant -0.537 with PDP, non-significant 0.539 with CCC and significant 0.824 with CR. TABLE 5.233: Descriptive Analysis for Kohinoor Energy Ltd.


Return on Assets 0.100 0.121 0.120 0.152 0.117 0.090 0.117 0.021





Cash Conversion Cycle -241.0 -218.3 -166.9 -36.74 28.74 55.88 -96.38 128.95

Current Ratio 1.587 1.661 1.566 2.030 3.044 3.477 2.228 0.829



Sales Growth 0.499 -0.027 0.178 0.887 -0.031 0.385 0.315 0.353

TABLE 5.234: Quantitative Analysis for Kohinoor Energy Ltd.



268

This Correlation Matrix reveals many significant relationships between the Operating Profit to Sales variable and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.045 with ICP, non-significant -0.496 with RCP, non-significant -0.085 with PDP, non-significant -0.019 with CCC and non-significant -0.385 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; significant 0.959 with ICP, non-significant -0.811 with RCP, significant 0.979 with PDP, significant -0.984 with CCC and significant -0.912 with CR. TABLE 5.235: Descriptive Analysis for Mari Gas Company Ltd.


Return on Assets 0.123 0.133 0.102 0.074 0.161 0.427 0.170 0.129






Current Ratio 1.204 0.831 0.872 0.889 0.954 0.988 0.956 0.134


Size (Measured by LN 23.248 23.381 23.492 23.701 23.824 23.794 23.573 0.236



269

Sales) Sales Growth 0.100 0.142 0.118 0.233 0.130 -0.029 0.116 0.085

TABLE 5.236: Quantitative Analysis for Mari Gas Company Ltd.

This Correlation Matrix reveals a significant relationship between the profitability measures and the RCP variable. The Correlation coefficients of Return on Assets with the independent variables are; significant 0.971 with RCP, non-significant 0.513 with PDP, non-significant -0.108 with CCC and non-significant 0.154 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; significant 0.973 with RCP, non-significant 0.436 with PDP, non-significant -0.022 with CCC and non-significant 0.261 with CR. TABLE 5.237: Descriptive Analysis for National Refinery Ltd.


Return on Assets 0.147 0.164 0.179 0.211 0.187 0.190 0.180 0.022




Payable Deferral 78.97 99.22 64.23 61.92 70.58 78.59 75.59 13.56



270

Period Cash Conversion Cycle -0.71 -49.56 -37.55 -16.05 -22.87 -17.26 -24.00 17.26

Current Ratio 1.314 1.300 1.471 1.455 1.522 1.507 1.428 0.097



Sales Growth 0.215 0.120 0.494 0.398 0.129 0.340 0.283 0.152

TABLE 5.238: Quantitative Analysis for National Refinery Ltd.

This Correlation Matrix reveals only one significant relationship between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.052 with ICP, non-significant -0.592 with RCP, non-significant -0.604 with PDP, non-significant -0.013 with CCC and non-significant 0.749 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; significant 0.840 with ICP, non-significant -0.290 with RCP, non-significant 0.345 with PDP, non-significant -0.230 with CCC and non-significant 0.335 with CR. TABLE 5.239: Descriptive Analysis for Pakistan Oilfields Ltd.


Return on Assets 0.333 0.265 0.312 0.350 0.329 0.291 0.313 0.031

Operating Profit to 0.466 0.433 0.491 0.480 0.517 0.532 0.487 0.036



271

Sales Inventory Conversion Period 1.24 1.60 2.35 2.51 3.24 2.60 2.26 0.73




Current Ratio 2.069 1.514 2.197 2.393 3.042 3.002 2.370 0.584



Sales Growth 0.054 0.011 0.300 0.759 -0.079 0.146 0.199 0.303

TABLE 5.240: Quantitative Analysis for Pakistan Oilfields Ltd.

This Correlation Matrix exhibits a few significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.255 with ICP, non-significant 0.404 with RCP, significant -0.876 with PDP, significant 0.900 with CCC and non-significant 0.364 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.778 with ICP, non-significant 0.316 with RCP, non-significant -0.320 with PDP, non-significant 0.363 with CCC and significant 0.964 with CR.



272

TABLE 5.241: Descriptive Analysis for Pakistan Refinery Ltd.


Return on Assets 0.257 0.183 0.340 0.172 0.034 0.137 0.187 0.104





Cash Conversion Cycle -8.14 2.20 11.74 -0.32 -0.24 7.53 2.13 6.91

Current Ratio 1.092 1.203 1.594 1.501 1.390 1.343 1.354 0.186



Sales Growth 0.047 0.005 0.550 0.620 -0.064 0.592 0.292 0.327

TABLE 5.242: Quantitative Analysis for Pakistan Refinery Ltd.

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.618 with ICP, non-



273

significant 0.059 with RCP, non-significant -0.513 with PDP, non-significant 0.244 with CCC and non-significant 0.122 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.419 with ICP, non-significant 0.252 with RCP, non-significant -0.323 with PDP, non-significant 0.334 with CCC and non-significant 0.038 with CR. TABLE 5.243: Descriptive Analysis for Pakistan State Oil Company Ltd.


Return on Assets 0.193 0.148 0.178 0.166 0.095 0.168 0.158 0.034






Current Ratio 1.407 1.273 1.310 1.267 1.238 1.243 1.290 0.063



Sales Growth 0.132 -0.055 0.304 0.391 0.164 0.416 0.225 0.179

TABLE 5.244: Quantitative Analysis for Pakistan State Oil Company Ltd.



274

This Correlation Matrix reveals no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.124 with ICP, non-significant 0.193 with RCP, non-significant -0.220 with PDP, non-significant 0.415 with CCC and non-significant 0.676 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.492 with ICP, non-significant 0.299 with RCP, non-significant 0.413 with PDP, non-significant 0.301 with CCC and non-significant 0.098 with CR. TABLE 5.245: Descriptive Analysis for Shell Pakistan Ltd.


Return on Assets 0.147 0.143 0.179 0.163 0.013 0.189 0.139 0.064






Current Ratio 1.164 1.085 1.236 1.243 1.146 1.394 1.211 0.107




275


Sales Growth 0.131 0.014 0.236 0.193 -0.019 0.214 0.128 0.108

TABLE 5.246: Quantitative Analysis for Shell Pakistan Ltd.

This Correlation Matrix depicts a few significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.297 with ICP, non-significant -0.241 with RCP, non-significant -0.245 with PDP, significant 0.928 with CCC and non-significant 0.529 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.774 with ICP, non-significant 0.188 with RCP, non-significant 0.316 with PDP, significant 0.963 with CCC and significant 0.867 with CR. TABLE 5.247: Descriptive Analysis for Southern Electric Power Co. Ltd.


Return on Assets 0.040 0.032 0.008 0.005 -0.038 -0.037 0.002 0.033






276



Current Ratio 0.621 0.476 0.453 0.317 0.289 0.290 0.408 0.133



Sales Growth 0.164 -0.115 0.237 0.516 0.041 -0.097 0.124 0.237

TABLE 5.248: Quantitative Analysis for Southern Electric Power Co. Ltd.

This Correlation Matrix depicts a significant positive relationship between the profitability measures and the CR. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.773 with ICP, non-significant 0.546 with RCP, non-significant 0.117 with PDP, non-significant 0.324 with CCC and significant 0.883 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.767 with ICP, non-significant 0.683 with RCP, non-significant 0.226 with PDP, non-significant 0.242 with CCC and significant 0.943 with CR. TABLE 5.249: Descriptive Analysis for Sui Northern Gas Pipelines Ltd.


Return on Assets 0.068 0.064 0.066 0.066 0.051 0.041 0.059 0.011



277






Current Ratio 0.502 0.496 0.638 0.559 0.504 0.456 0.526 0.064



Sales Growth 0.087 0.621 0.317 0.107 0.271 -0.095 0.218 0.246

TABLE 5.250: Quantitative Analysis for Sui Northern Gas Pipelines Ltd.

This Correlation Matrix depicts no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.172 with ICP, non-significant 0.271 with RCP, non-significant -0.059 with PDP, non-significant 0.134 with CCC and non-significant 0.599 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.711 with ICP, non-significant 0.792 with



278

RCP, non-significant 0.587 with PDP, non-significant -0.473 with CCC and non-significant 0.006 with CR. TABLE 5.251: Descriptive Analysis for Sui Southern Gas Company Ltd.


Return on Assets 0.068 0.049 0.042 0.037 0.022 0.033 0.042 0.016






Current Ratio 0.877 0.932 0.828 0.816 0.768 0.826 0.841 0.056



Sales Growth 0.122 0.310 0.148 0.241 0.105 0.013 0.157 0.105

TABLE 5.252: Quantitative Analysis for Sui Southern Gas Company Ltd.



279

This Correlation Matrix depicts only one significant relationship between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.300 with ICP, non-significant -0.344 with RCP, non-significant -0.429 with PDP, non-significant 0.491 with CCC and non-significant 0.744 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; significant 0.871 with ICP, non-significant 0.409 with RCP, non-significant 0.348 with PDP, non-significant -0.289 with CCC and non-significant 0.360 with CR. TABLE 5.253: Descriptive Analysis for The Hub Power Company Ltd.


Return on Assets 0.110 0.106 0.116 0.064 0.059 0.041 0.083 0.032





Cash Conversion Cycle -283.9 -265.5 -88.52 1.84 17.36 -12.14 -105.2 136.42

Current Ratio 1.626 1.726 2.473 2.381 1.712 1.068 1.831 0.522



Sales Growth -0.087 -0.145 0.074 0.726 0.604 0.421 0.266 0.369

TABLE 5.254: Quantitative Analysis for The Hub Power Company Ltd.



280

This Correlation Matrix depicts a mix of significant and non-significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; significant 0.881 with ICP, non-significant -0.755 with RCP, non-significant 0.678 with PDP, non-significant -0.777 with CCC and non-significant 0.454 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; significant 0.921 with ICP, non-significant -0.642 with RCP, significant 0.833 with PDP, significant -0.898 with CCC and non-significant 0.276 with CR. TABLE 5.255: Descriptive Analysis for Pakistan International Airlines Corporation Ltd.


Return on Assets 0.065 0.011 -0.062 -0.122 -0.110 -0.281 -0.083 0.121

Operating Profit to Sales 0.131 0.053 -0.027 -0.101 -0.084 -0.305 -0.056 0.150





Current Ratio 1.063 1.430 0.988 0.631 0.418 0.326 0.809 0.424




281


Sales Growth 0.098 0.205 0.109 0.193 -0.078 0.407 0.156 0.159

TABLE 5.256: Quantitative Analysis for Pakistan International Airlines Corporation Ltd.

This Correlation Matrix depicts a significant relationship between the profitability measures and the CR. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.660 with ICP, non-significant 0.549 with RCP, non-significant -0.306 with PDP, non-significant 0.267 with CCC and significant 0.833 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.654 with ICP, non-significant 0.558 with RCP, non-significant -0.293 with PDP, non-significant 0.255 with CCC and significant 0.816 with CR. TABLE 5.257: Descriptive Analysis for Pakistan National Shipping Corporation.


Return on Assets 0.121 0.239 0.194 0.102 0.174 0.256 0.181 0.062






282



Current Ratio 4.514 2.967 3.808 3.682 4.399 1.693 3.511 1.050



Sales Growth 0.119 0.288 0.142 -0.003 0.147 0.183 0.146 0.094

TABLE 5.258: Quantitative Analysis for Pakistan National Shipping Corporation.

This Correlation Matrix exhibits no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.056 with ICP, non-significant -0.025 with RCP, non-significant 0.811 with PDP, non-significant -0.769 with CCC and non-significant -0.753 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.267 with ICP, non-significant 0.077 with RCP, non-significant 0.722 with PDP, non-significant -0.654 with CCC and non-significant -0.415 with CR. TABLE 5.259: Descriptive Analysis for Pakistan Telecommunication Company Ltd.


Return on Assets 0.283 0.296 0.310 0.209 0.172 -0.013 0.210 0.122



283






Current Ratio 1.141 1.114 1.946 1.683 1.498 0.658 1.340 0.462



Sales Growth 0.146 0.116 -0.035 -0.144 0.187 -0.063 0.035 0.133

TABLE 5.260: Quantitative Analysis for Pakistan Telecommunication Company Ltd.

This Correlation Matrix exhibits no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.317 with ICP, non-significant -0.157 with RCP, non-significant -0.549 with PDP, non-significant 0.645 with CCC and non-significant 0.614 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.328 with ICP, non-significant -0.134 with



284

RCP, non-significant -0.470 with PDP, non-significant 0.580 with CCC and non-significant 0.621 with CR. TABLE 5.261: Descriptive Analysis for Lakson Tobacco Company Ltd.


Return on Assets 0.332 0.390 0.462 0.402 0.399 0.185 0.362 0.096





Cash Conversion Cycle -4.60 -20.81 4.76 23.68 30.71 33.66 11.23 21.71

Current Ratio 1.536 1.442 2.388 3.427 3.691 1.775 2.377 0.977



Sales Growth -0.030 0.246 0.188 -0.116 0.088 0.112 0.081 0.135

TABLE 5.262: Quantitative Analysis for Lakson Tobacco Company Ltd.



285

This Correlation Matrix exhibits a few significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; significant -0.946 with ICP, non-significant 0.573 with RCP, non-significant -0.734 with PDP, non-significant -0.367 with CCC and non-significant 0.421 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.681 with ICP, non-significant 0.366 with RCP, significant -0.934 with PDP, non-significant 0.060 with CCC and non-significant 0.785 with CR. TABLE 5.263: Descriptive Analysis for Pakistan Tobacco Company Ltd.


Return on Assets 0.084 0.150 0.261 0.328 0.378 0.375 0.263 0.122






Current Ratio 0.890 0.920 0.963 0.915 0.805 0.707 0.867 0.094



Sales Growth 0.098 0.128 0.203 0.167 0.145 0.200 0.157 0.041

TABLE 5.264: Quantitative Analysis for Pakistan Tobacco Company Ltd.



286

This Correlation Matrix portrays all negative relationships between the profitability measures and the indicators of WCM & liquidity. However, only one among them is found to be statistically significant. The Correlation coefficients of Return on Assets with the independent variables are; significant -0.890 with ICP, non-significant -0.716 with RCP, non-significant -0.770 with PDP, non-significant -0.213 with CCC and non-significant -0.560 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.801 with ICP, non-significant -0.716 with RCP, non-significant -0.774 with PDP, non-significant -0.090 with CCC and non-significant -0.426 with CR. TABLE 5.265: Descriptive Analysis for Thal Jute Mills Ltd.


Return on Assets 0.385 0.334 0.361 0.300 0.292 0.188 0.310 0.069






Current Ratio 2.114 2.311 3.427 3.833 5.200 3.378 3.377 1.119




287


Sales Growth 0.351 0.266 0.320 0.485 0.148 0.430 0.333 0.120

TABLE 5.266: Quantitative Analysis for Thal Jute Mills Ltd.

This Correlation Matrix exhibits no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.038 with ICP, non-significant -0.105 with RCP, non-significant 0.149 with PDP, non-significant -0.089 with CCC and non-significant -0.399 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.369 with ICP, non-significant 0.092 with RCP, non-significant -0.113 with PDP, non-significant 0.261 with CCC and non-significant 0.060 with CR. TABLE 5.267: Descriptive Analysis for Bata Pakistan Ltd.


Return on Assets 0.107 0.140 0.094 0.118 0.269 0.291 0.170 0.087






288


Cash Conversion Cycle -2.01 18.41 26.19 14.15 2.80 53.30 18.81 19.78

Current Ratio 1.324 1.517 1.592 1.509 1.626 2.055 1.604 0.245



Sales Growth 0.197 0.020 0.078 0.128 0.291 0.292 0.168 0.112

TABLE 5.268: Quantitative Analysis for Bata Pakistan Ltd.

This Correlation Matrix exhibits no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.537 with ICP, non-significant -0.703 with RCP, non-significant -0.661 with PDP, non-significant 0.418 with CCC and non-significant 0.779 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.471 with ICP, non-significant -0.646 with RCP, non-significant -0.612 with PDP, non-significant 0.373 with CCC and non-significant 0.748 with CR. TABLE 5.269: Descriptive Analysis for Ghani Glass Ltd.


Return on Assets 0.269 0.211 0.212 0.161 0.120 0.173 0.191 0.051



289





Cash Conversion Cycle 53.81 75.28 49.19 -60.61 -73.09 -81.51 -6.16 72.69

Current Ratio 6.110 2.665 3.078 1.338 1.431 1.404 2.671 1.839



Sales Growth 0.318 0.518 0.686 0.920 0.157 0.286 0.481 0.285

TABLE 5.270: Quantitative Analysis for Ghani Glass Ltd.

This Correlation Matrix exhibits a mix of significant and non-significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.004 with ICP, non-significant 0.807 with RCP, significant -0.887 with PDP, significant 0.815 with CCC and significant 0.905 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.088 with ICP, non-significant 0.803 with



290

RCP, non-significant -0.653 with PDP, non-significant 0.677 with CCC and significant 0.827 with CR. TABLE 5.271: Descriptive Analysis for National Foods Ltd.


Return on Assets 0.065 0.122 0.060 0.110 0.162 0.134 0.109 0.040






Current Ratio 0.940 0.978 1.070 1.141 1.045 1.004 1.030 0.072



Sales Growth 0.133 0.153 0.188 0.191 0.277 0.284 0.204 0.063

TABLE 5.272: Quantitative Analysis for National Foods Ltd.



291

This Correlation Matrix shows no significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.405 with ICP, non-significant 0.331 with RCP, non-significant 0.566 with PDP, non-significant -0.605 with CCC and non-significant 0.111 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.554 with ICP, non-significant 0.608 with RCP, non-significant 0.733 with PDP, non-significant -0.562 with CCC and non-significant 0.145 with CR. TABLE 5.273: Descriptive Analysis for Nestlé Pakistan Ltd.


Return on Assets 0.298 0.250 0.188 0.157 0.162 0.134 0.198 0.063






Current Ratio 0.747 0.965 0.737 0.453 0.492 0.829 0.704 0.197



Sales Growth 0.145 0.239 0.381 0.281 0.266 0.186 0.250 0.082

TABLE 5.274: Quantitative Analysis for Nestlé Pakistan Ltd.



292

This Correlation Matrix displays only one significant relationship between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.513 with ICP, significant -0.830 with RCP, non-significant -0.553 with PDP, non-significant 0.592 with CCC and non-significant 0.442 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.551 with ICP, non-significant -0.632 with RCP, non-significant 0.140 with PDP, non-significant -0.057 with CCC and non-significant -0.138 with CR. TABLE 5.275: Descriptive Analysis for Pakistan Services Ltd.


Return on Assets 0.012 0.039 0.037 0.062 0.075 0.034 0.043 0.022






Current Ratio 0.793 1.406 1.456 1.471 1.347 1.229 1.284 0.256




293


Sales Growth 0.019 0.300 0.490 0.273 0.165 -0.034 0.202 0.194

TABLE 5.276: Quantitative Analysis for Pakistan Services Ltd.

This Correlation Matrix exhibits a few significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.747 with ICP, non-significant -0.600 with RCP, non-significant -0.749 with PDP, non-significant 0.740 with CCC and non-significant 0.694 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.569 with ICP, significant -0.826 with RCP, significant -0.904 with PDP, significant 0.896 with CCC and non-significant 0.751 with CR. TABLE 5.277: Descriptive Analysis for Rafhan Maize Products Co. Ltd.


Return on Assets 0.339 0.336 0.272 0.355 0.426 0.440 0.361 0.063






294



Current Ratio 1.708 1.860 1.951 2.391 2.560 1.922 2.065 0.333



Sales Growth -0.083 0.252 0.100 0.139 0.241 0.425 0.179 0.171

TABLE 5.278: Quantitative Analysis for Rafhan Maize Products Co. Ltd.

This Correlation Matrix contains only one significant relationship between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.592 with ICP, non-significant -0.128 with RCP, non-significant -0.525 with PDP, non-significant -0.684 with CCC and non-significant 0.404 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.265 with ICP, non-significant -0.262 with RCP, non-significant -0.091 with PDP, significant -0.931 with CCC and non-significant 0.132 with CR. TABLE 5.279: Descriptive Analysis for Service Industries Ltd.


Return on Assets 0.011 0.020 0.032 0.058 0.096 0.143 0.060 0.051



295





Cash Conversion Cycle -10.73 -6.02 -3.11 0.98 -5.62 -40.23 -10.79 14.93

Current Ratio 1.173 1.195 1.216 1.235 1.228 1.234 1.214 0.025



Sales Growth 0.038 0.073 0.165 0.087 0.173 0.412 0.158 0.135

TABLE 5.280: Quantitative Analysis for Service Industries Ltd.

This Correlation Matrix contains many significant relationships between the profitability measures and the indicators of WCM & liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.793 with ICP, significant -0.962 with RCP, significant -0.914 with PDP, non-significant -0.708 with CCC and non-significant 0.765 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant -0.798 with ICP, significant -0.879 with RCP,



296

significant -0.945 with PDP, non-significant -0.507 with CCC and significant 0.894 with CR. TABLE 5.281: Descriptive Analysis for Tri-Pack Films Ltd.


Return on Assets 0.204 0.060 0.044 0.087 0.202 0.168 0.128 0.072






Current Ratio 1.495 1.072 1.103 1.138 1.119 1.011 1.156 0.172



Sales Growth 0.163 0.147 0.650 0.283 0.238 0.318 0.300 0.184

TABLE 5.282: Quantitative Analysis for Tri-Pack Films Ltd.



297

This Correlation Matrix exhibits a significant negative relationship of RCP with the profitability measures. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.090 with ICP, significant -0.880 with RCP, non-significant -0.182 with PDP, non-significant -0.078 with CCC and non-significant 0.452 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.026 with ICP, significant -0.847 with RCP, non-significant -0.157 with PDP, non-significant 0.076 with CCC and non-significant 0.636 with CR. TABLE 5.283: Descriptive Analysis for Unilever Pakistan Foods Ltd.


Return on Assets -0.027 0.066 0.287 0.411 0.452 0.636 0.304 0.249






Current Ratio 1.322 1.901 2.268 1.844 0.761 0.737 1.472 0.636



Sales Growth 0.160 -0.188 0.151 0.301 0.229 0.285 0.156 0.180

TABLE 5.284: Quantitative Analysis for Unilever Pakistan Foods Ltd.



298

This Correlation Matrix also presents a significant negative relationship of RCP with the profitability measures. The Correlation coefficients of Return on Assets with the independent variables are; non-significant 0.083 with ICP, significant -0.964 with RCP, non-significant 0.109 with PDP, non-significant -0.317 with CCC and non-significant -0.474 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.097 with ICP, significant -0.938 with RCP, non-significant 0.012 with PDP, non-significant -0.188 with CCC and non-significant -0.337 with CR. TABLE 5.285: Descriptive Analysis for Unilever Pakistan Ltd.


Return on Assets 0.389 0.374 0.431 0.380 0.315 0.258 0.358 0.061






Current Ratio 0.922 1.212 1.070 0.932 0.754 0.766 0.943 0.177




299


Sales Growth 0.017 -0.027 0.006 0.181 0.125 0.308 0.102 0.128

TABLE 5.286: Quantitative Analysis for Unilever Pakistan Ltd.

This Correlation Matrix demonstrates no significant relationship between the profitability measures and that of the variables of WCM and liquidity. The Correlation coefficients of Return on Assets with the independent variables are; non-significant -0.439 with ICP, non-significant -0.386 with RCP, non-significant -0.498 with PDP, non-significant 0.527 with CCC and non-significant 0.709 with CR. The Correlation coefficients, on the other hand, of Operating Profit to Sales with the independent variables are; non-significant 0.022 with ICP, non-significant -0.480 with RCP, non-significant -0.075 with PDP, non-significant 0.128 with CCC and non-significant 0.548 with CR.

5.3 RESULTS OF THE CORRELATION ANALYSES OF

INDIVIDUAL FIRMS IN SAMPLE 1

This section contains all the results gathered from the Correlation analysis of each

individual sample SME made in the previous section. Since two profitability measures

have been used in this study, i.e., the Return on Assets (ROA) and the Operating Profit to

Sales (OPS), results drawn from the Correlation analysis of each profitability index with

the indicators of WCM and Liquidity are grouped and mentioned separately.



300

The following tables illustrate and summarize, in a coherent manner, the results of the

Correlation analysis of all the sample organizations. Table 5.287 describes the

Correlation of ROA with the WCM and liquidity indicators for each of the two samples

separately. Table 5.288, on the other hand, reveals the Correlation of OPS with the WCM

and liquidity indicators for small as well as large firms. The tables also include

percentage of firms for each given number of firms to make the results of small and large

companies more comparable.

TABLE 5.287: Correlation Statistics of ROA & Other Variables

SMALL FIRMS LARGE FIRMS CORRELATION OF ROA AND ICP CORRELATION OF ROA AND ICP

Firms Positive Sig. +ve

Negative Sig. -ve

Firms Positive Sig. +ve

Negative Sig. -ve

Number 20 2 18 1 Number 46 4 56 4

%age 50 10 45 6 %age 45 9 54 7

CORRELATION OF ROA AND RCP CORRELATION OF ROA AND RCPFirms Positive Sig.

+ve Negative Sig.

-ve Firms Positive Sig.

+ve Negative Sig.

-ve Number 18 2 21 4 Number 34 3 68 14

%age 45 11 53 19 %age 33 9 66 21

CORRELATION OF ROA AND PDP CORRELATION OF ROA AND PDPFirms Positive Sig.

+ve Negative Sig.


+ve Negative Sig.

-ve Number 14 0 26 7 Number 29 2 74 13

%age 35 0 65 27 %age 28 7 72 18

CORRELATION OF ROA AND CCC CORRELATION OF ROA AND CCCFirms Positive Sig.

+ve Negative Sig.


+ve Negative Sig.

-ve Number 24 6 16 1 Number 68 10 35 3

%age 60 25 40 6 %age 66 15 34 9

CORRELATION OF ROA AND CR CORRELATION OF ROA AND CRFirms Positive Sig.

+ve Negative Sig.


+ve Negative Sig.

–ve Number 26 7 14 1 Number 77 13 26 4

%age 65 27 35 7 %age 75 17 25 15

TABLE 5.288: Correlation Statistics of OPS & Other Variables

SMALL FIRMS LARGE FIRMS CORRELATION OF OPS AND ICP CORRELATION OF OPS AND ICP

Firms Positive Sig. Negative Sig. Firms Positive Sig. Negative Sig.



301

+ve -ve +ve -ve Number 18 2 20 2 Number 69 7 33 0

%age 45 11 50 10 %age 67 10 32 0

CORRELATION OF OPS AND RCP CORRELATION OF OPS AND RCPFirms Positive Sig.

+ve Negative Sig.


+ve Negative Sig.

-ve Number 15 4 24 5 Number 49 1 53 11

%age 37 27 60 21 %age 48 2 51 21

CORRELATION OF OPS AND PDP CORRELATION OF OPS AND PDPFirms Positive Sig.

+ve Negative Sig.


+ve Negative Sig.

-ve Number 13 3 27 6 Number 62 9 41 7

%age 32 23 68 22 %age 60 15 40 17

CORRELATION OF OPS AND CCC CORRELATION OF OPS AND CCCFirms Positive Sig.

+ve Negative Sig.


+ve Negative Sig.

-ve Number 23 6 17 3 Number 47 5 56 9

%age 57 26 43 18 %age 46 11 54 16

CORRELATION OF OPS AND CR CORRELATION OF OPS AND CRFirms Positive Sig.

+ve Negative Sig.


+ve Negative Sig.

-ve Number 29 7 11 1 Number 68 14 35 6

%age 72 24 28 9 %age 66 21 34 17

5.3.1 Correlation of ROA with the Indicators of WCM

and Liquidity

Findings from the Correlation analysis of ROA with the Inventory Conversion Period

(ICP), Receivable Collection Period (RCP), Payable Deferral Period (PDP), Cash

Conversion Cycle (CCC) and the Current Ratio (CR) are described separately below:

5.3.1.1 ROA and the Inventory Conversion Period

The results of the Correlation Analysis between the ‘Return on Assets’ and the ‘Inventory

Conversion Period’ indicated that out of the 40 small sized sample companies, 18 firms

showed a negative relationship between the two variables with only one firm depicting a

significant negative Correlation.

Of the other 22 companies, 20 firms signified a positive Correlation coefficient between

ROA and ICP. However, only two of them showed a significant positive Correlation. The

remaining two firms had zero levels of Inventory and their relationship with the

profitability variables was not calculated.



302

5.3.1.2 ROA and the Receivable Collection Period

The results of the Correlation Analysis between the ‘Return on Assets’ and the

‘Receivable Collection Period’ indicated that out of the 40 small sized sample companies,

21 firms showed a negative relationship between the two variables with four companies

representing a significant negative Correlation.

Of the other 19 companies, 18 firms demonstrated a positive Correlation coefficient

between ROA and RCP. However, only two of them showed a significant positive

Correlation. The remaining one firm had zero levels of Receivables for all the years and

its relationship with the profitability variables was, thus, not computed.

5.3.1.3 ROA and the Payable Deferral Period

The results of the Correlation Analysis between the ‘Return on Assets’ and the ‘Payable

Deferral Period’ showed that 26 out of all the small sized sample companies represented

a negative relationship between the two variables and seven among these depicted a


The remaining 14 firms signified a positive Correlation coefficient between ROA and

PDP. However, none of them showed a significant positive Correlation.

5.3.1.4 ROA and the Cash Conversion Cycle

The results of the Correlation Analysis between the ‘Return on Assets’ and the ‘Cash

Conversion Cycle’ depicted that 16 out of all the small sized sample companies

represented a negative relationship between the two variables but only one among these

had a statistically significant negative Correlation.

The remaining 24 firms indicated a positive Correlation coefficient between ROA and

CCC with six of them showing a significant positive Correlation.

5.3.1.5 ROA and the Current Ratio

The results of the Correlation Analysis between the ‘Return on Assets’ and the ‘Current

Ratio’ showed that 14 out of all the small sized sample companies represented a negative

relationship between the two variables with only one among them depicting a significant

negative Correlation.

The remaining 26 firms all signified a positive Correlation coefficient between ROA and

CR and seven among them also showed a significant positive Correlation.



303

5.3.2 Correlation of OPS with the Indicators of WCM

and Liquidity

Findings from the Correlation analysis of OPS with the Inventory Conversion Period


Conversion Cycle (CCC) and the Current Ratio (CR) are described separately in this

section:

5.3.2.1 OPS and the Inventory Conversion Period

The results of the Correlation Analysis between the ‘Operating Profit to Sales’ and the

‘Inventory Conversion Period’ indicated that half of all the small sized sample companies

(20 out of 40) showed a negative relationship between the two variables with two of them

depicting a significant negative Correlation.


OPS and ICP. However, only two of them showed a significant positive Correlation. The

remaining two firms had zero levels of Inventory and their relationship with the

profitability variables was not calculated.

5.3.2.2 OPS and the Receivable Collection Period


‘Receivable Collection Period’ indicated that out of the 40 small sized sample companies,

24 firms showed a negative relationship between the two variables and five among them

depicted a significant negative Correlation.


OPS and RCP out of which four companies showed a significant positive Correlation.

The remaining one firm had zero levels of Receivables and its relationship with the

profitability variables was, therefore, not computed.

5.3.2.3 OPS and the Payable Deferral Period


‘Payable Deferral Period’ showed that 27 out of all the small sized sample companies

represented a negative relationship between the two variables and six among these


Out of the remaining 13 firms that had a positive Correlation coefficient between OPS

and PDP, three firms showed a significant positive Correlation.



304

5.3.2.4 OPS and the Cash Conversion Cycle


‘Cash Conversion Cycle’ depicted that 17 out of all the small sized sample companies

represented a negative relationship between the two variables with three of them having a

statistically significant negative Correlation.

The remaining 23 firms indicated a positive Correlation coefficient between OPS and

CCC and six of them showed significance in their Correlation.

5.3.2.5 OPS and the Current Ratio


Current Ratio showed that 11 out of all the small sized sample companies represented a

negative relationship between the two variables with only one among them depicting a


The remaining 29 firms all signified a positive Correlation coefficient between OPS and

CR and seven among them also showed a significant positive Correlation.

Results of Overall Individual SME Correlation Analysis

By studying the overall picture of the Correlation analysis of all the SME’s illustrated in

Section 5.1, following findings were drawn:

The profitability measures (ROA & OPS) of half of the firms in sample 1 were

found to have a negative Correlation with their Inventory Conversion Periods and

a positive one with the remaining half.

The majority of small firms depicted a negative association between their

profitability indicators and the ‘Receivable Collection Period’.

A big majority of small firms also represented a negative association between

their profitability indicators and the ‘Payable Deferral Period’.

The ‘Cash Conversion Cycle’ was found to have positive relationship with the

profitability indexes of most of small firms in the sample 1.

The ‘Current Ratio’ was also found to be positively associated with the

profitability measures of a vast majority of small firms in the sample.



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5.4 RESULTS OF THE CORRELATION ANALYSES OF

INDIVIDUAL FIRMS IN SAMPLE 2

This section contains all the results gathered from the Correlation analysis of each

individual sample Large Company made in the previous section. Since two profitability

measures have been used in this study, i.e., the Return on Assets (ROA) and the

Operating Profit to Sales (OPS), results drawn from the Correlation analysis of each

profitability index with the indicators of WCM and Liquidity are grouped and mentioned

separately:

5.4.1 Correlation of ROA with the Indicators of WCM

and Liquidity

Findings from the Correlation analysis of ROA with the Inventory Conversion Period



section:

5.4.1.1 ROA and the Inventory Conversion Period

The results of the Correlation Analysis between the ‘Return on Assets’ and the ‘Inventory

Conversion Period’ indicated that out of the 103 large-sized sample companies, 56 firms

showed a negative relationship between the two variables with only four of them

depicting a significant negative Correlation.

Forty six out of the remaining 47 companies signified a positive Correlation coefficient

between ROA and ICP. There again, only four companies showed a significant positive

Correlation. The remaining one firm had zero levels of Inventory for all the years under

study and, hence, its relationship with the profitability variables was not calculated.

5.4.1.2 ROA and the Receivable Collection Period

The results of the Correlation Analysis between the ‘Return on Assets’ and the

‘Receivable Collection Period’ indicated that out of the 103 large-sized sample

companies, 68 firms showed a negative relationship between the two variables with 14

companies representing a significant negative Correlation.



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Thirty four out of the remaining 35 firms demonstrated a positive Correlation coefficient

between ROA and RCP. However, only three out of them showed a significant positive

Correlation. The remaining one firm had zero levels of Receivables for all the years and

its relationship with the profitability variables was, thus, not computed.

5.4.1.3 ROA and the Payable Deferral Period

The results of the Correlation Analysis between the ‘Return on Assets’ and the ‘Payable

Deferral Period’ showed that 74 out of all the large-sized sample companies represented a

negative relationship between the two variables and 13 among these depicted a


The remaining 29 firms signified a positive Correlation between ROA and PDP.

However, only two among them showed a significant positive Correlation.

5.4.1.4 ROA and the Cash Conversion Cycle

The results of the Correlation Analysis between the ‘Return on Assets’ and the ‘Cash

Conversion Cycle’ showed that 35 out of all the large-sized sample companies

represented a negative relationship between the two variables. However, only three

among these had a statistically significant negative Correlation.

The remaining 68 firms indicated a positive Correlation coefficient between ROA and

CCC with 10 of them showing a significant positive Correlation.

5.4.1.5 ROA and the Current Ratio

The results of the Correlation Analysis between the ‘Return on Assets’ and the ‘Current

Ratio’ showed that 26 out of all the large-sized sample companies represented a negative

relationship between the two variables with four among them depicting a significant

negative Correlation.

The remaining 77 firms all signified a positive Correlation coefficient between ROA and

CR and 13 among them also showed a significant positive Correlation.



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5.4.2 Correlation of OPS with the Indicators of WCM

and Liquidity

Findings from the Correlation analysis of OPS with the Inventory Conversion Period



section:

5.4.2.1 OPS and the Inventory Conversion Period


‘Inventory Conversion Period’ indicated that 33 out of the 103 large-sized sample

companies showed a negative relationship between the two variables but none of them


Of the remaining 70 companies, 69 firms signified a positive Correlation coefficient

between OPS and ICP. However, only seven out of them showed a significant positive

Correlation. The remaining one firm had zero levels of Inventory during all the years of

study and its relationship with the profitability variables was, therefore, not calculated.

5.4.2.2 OPS and the Receivable Collection Period


‘Receivable Collection Period’ indicated that, out of the 103 large-sized sample

companies, 53 firms showed a negative relationship between the two variables and 11

among them depicted a significant negative Correlation.

Of the other remaining 50 companies, 49 firms signified a positive Correlation between

OPS and RCP out of which only one firm showed a significant positive Correlation. The

remaining one firm had zero levels of Receivables for all the years of study and its

relationship with the profitability variables was, therefore, not computed.

5.4.2.3 OPS and the Payable Deferral Period


‘Payable Deferral Period’ showed that 41 out of all the large-sized sample companies

represented a negative relationship between the two variables and seven among these


Out of the remaining 62 firms that had a positive Correlation coefficient between OPS

and PDP, nine firms showed a significant positive Correlation.



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5.4.2.4 OPS and the Cash Conversion Cycle


‘Cash Conversion Cycle’ depicted that 56 out of all the large-sized sample companies

represented a negative relationship between the two variables with nine of them having a

statistically significant negative Correlation.

The remaining 47 firms indicated a positive Correlation coefficient between OPS and

CCC and five of them showed significance in their Correlation.

5.4.2.5 OPS and the Current Ratio


Current Ratio showed that 35 out of all the large-sized sample companies represented a

negative relationship between the two variables with six firms among them depicting a


The remaining 68 firms all signified a positive Correlation between OPS and CR and 14

among them also showed a significant positive Correlation.

Results of Overall Individual Large Company Correlation

Analysis

By examining the general illustration of the Correlation analysis of all the large

companies described in Section 5.2, following results were obtained:

Almost half of the firms in sample 2 demonstrated a negative relationship

between the profitability measures (ROA & OPS) and the ‘Inventory Conversion

Period’ with the remaining half depicting a positive one.

The majority of large firms depicted a negative association between their

profitability indicators and the ‘Receivable Collection Period’.

A trivial majority of large firms signified a negative association between their

profitability indicators and the ‘Payable Deferral Period’.

Nearly half of the firms in sample 2 exhibited a negative relationship between the

profitability measures (ROA & OPS) and the ‘Cash Conversion Cycle’ and the

remaining half depicted a positive one.

The ‘Current Ratio’ was found to be positively linked with the profitability

measures of a considerable majority of large firms in the sample.



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5.5 COMPARISON OF RESULTS OF THE

CORRELATION ANALYSES FOR SAMPLE 1 AND

SAMPLE 2

This section is meant to logically compare the results of the Correlation analysis of small

companies with that of the large ones. The comparisons include Return on Assets -

Inventory Conversion Period (ROA-ICP) Correlation, Operating Profit to Sales -

Inventory Conversion Period (OPS-ICP) Correlation, Return on Assets - Receivable

Collection Period (ROA-RCP) Correlation, Operating Profit to Sales - Receivable

Collection Period (OPS-RCP) Correlation, Return on Assets - Payable Deferral Period

(ROA-PDP) Correlation, Operating Profit to Sales - Payable Deferral Period (OPS-PDP)

Correlation, Return on Assets - Cash Conversion Cycle (ROA-CCC) Correlation,

Operating Profit to Sales - Cash Conversion Cycle (OPS-CCC) Correlation, Return on

Assets - Current Ratio (ROA-CR) Correlation and Operating Profit to Sales

- Current Ratio (OPS-CR) Correlation for small and large companies in both the samples.

For the purpose of a better comparison, the numbers of firms (small or large) for any

given Correlation are replaced by the percentages of firms (small or large) for that

specific Correlation. All the percentages are rounded-off to the nearest whole number.

5.5.1 Comparison of ROA-ICP Correlations for Small

and Large Companies

45% of small companies showed a negative relationship between ROA and ICP with 6%

of them depicting a significant negative relationship. In comparison with that, 54% of

large corporations showed the same relationship between ROA and ICP with 7% of them

demonstrating a significant negative Correlation.

On the other hand, 50% of all the small firms in the sample 1 displayed a positive

Correlation between ROA and ICP and 10% among them signified a significant positive

association. Unlike that, 45% of large companies in sample 2 represented a positive

relationship between the two variables and 9% of them showed a significant positive link.

Hence, we see that a bigger percentage of Large firms show a negative relationship

between the ‘Return on Assets’ and the ‘Inventory Conversion Period’.



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5.5.2 Comparison of OPS-ICP Correlations for Small

and Large Companies

50% of small companies showed a negative relationship between OPS and ICP with 10%

of them depicting a significant negative relationship. In comparison with that, 32% of

large corporations showed the same relationship between OPS and ICP but none of them

demonstrated a significant negative Correlation.


Correlation between OPS and ICP and 11% among them signified a significant positive


relationship between the two variables and 10% of them exhibited a significant positive

association.

This comparison, on the other hand, shows that Small firms more frequently exhibit a

negative relationship between the ‘Operating Profit to Sales’ and the ‘Inventory

Conversion Period’.

5.5.3 Comparison of ROA-RCP Correlations for Small

and Large Companies

53% of small companies showed a negative relationship between ROA and RCP with

19% of them depicting a significant negative Correlation. In comparison with that, 66%

of large corporations showed the same relationship between ROA and RCP with 21% of

them demonstrating a significant negative Correlation.


Correlation between ROA and RCP and 11% among them signified a significant positive



association.

The comparison shows that larger firms demonstrate more negative relationships

(percentage-wise) between the ‘Return on Assets’ and the ‘Receivable Collection

Period’.



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5.5.4 Comparison of OPS-RCP Correlations for Small

and Large Companies

60% of small companies showed a negative relationship between OPS and RCP with


of large corporations showed the same relationship between OPS and RCP and 21% of

them demonstrated a significant negative Correlation.


Correlation between OPS and RCP and 27% among them signified a significant positive



association.

By replacing the ‘Return on Assets’ with the ‘Operating Profit to Sales’ ratio, contrasting

Correlation results are noticed. In that case, smaller firms are found to have more

negative relationships (percentage-wise) between the OPS and the Receivable Collection

Period.

5.5.5 Comparison of ROA-PDP Correlations for Small

and Large Companies

65% of small companies showed a negative relationship between ROA and PDP with


of large corporations showed the same relationship between ROA and PDP with 18% of

them demonstrating a significant negative Correlation.


Correlation between ROA and PDP but none of them signified a significant positive



association.

The results show that more Large than Small companies (percentage-wise) exhibit a

negative association between the ‘Return on Assets’ and the ‘Payable Deferral Period’.



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5.5.6 Comparison of OPS-PDP Correlations for Small

and Large Companies

68% of small companies showed a negative relationship between OPS and PDP with


of large corporations showed a negative relationship between the two variables and 17%

of them demonstrated a significant negative Correlation.


Correlation between OPS and PDP and 23% among them signified a significant positive



association.

We find that more smaller firms than larger ones (percentage-wise) signify a negative

relationship between the ‘Operating Profit to Sales’ and the ‘Payable Deferral Period’.

5.5.7 Comparison of ROA-CCC Correlations for Small

and Large Companies

40% of all the small companies in the sample 1 showed a negative relationship between

ROA and CCC with 6% of them depicting a significant negative Correlation. In

comparison with that, 34% of all the large corporations in the sample 2 showed a

negative relationship between the two variables with 9% of them demonstrating a


On the other hand, 60% of small firms displayed a positive Correlation between ROA

and CCC and 25% of them signified a significant positive association. Unlike that, 66%

of large companies represented a positive relationship between the two variables and 15%

of them exhibited a significant positive association.

This comparison portrays that larger firms more frequently show a positive relationship

between the ‘Return on Assets’ and the ‘Cash Conversion Cycle’ in contrast with smaller

ones.



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5.5.8 Comparison of OPS-CCC Correlations for Small

and Large Companies

43% of small companies in the sample 1 showed a negative relationship between OPS

and CCC with 18% of them depicting a significant negative Correlation. In comparison

with that, 54% of large corporations in the sample 2 showed a negative relationship

between the two variables and 16% of them demonstrated a significant negative

Correlation.

On the other hand, 57% of small firms displayed a positive Correlation between OPS and

CCC and 26% among them signified a significant positive association. Unlike that, 46%

of large companies represented a positive relationship between the two variables and 11%

of them exhibited a significant positive association.

This comparison, on the other hand, suggests that there are more small-sized than large-

sized firms (percentage-wise) that connote a positive association between the ‘Operating

Profit to Sales’ and the ‘Cash Conversion Cycle’.

5.5.9 Comparison of ROA-CR Correlations for Small

and Large Companies

35% of all the small companies in the sample 1 showed a negative relationship between

ROA and CR with 7% of them depicting a significant negative Correlation. In

comparison with that, 25% of all the large corporations in the sample 2 showed a

negative relationship between the two variables with 15% of them demonstrating a


On the other hand, 65% of small firms displayed a positive Correlation between ROA

and CR and 27% of them signified a significant positive association. Unlike that, 75% of

large companies represented a positive relationship between the two variables and 17% of

them exhibited a significant positive association.

The results clearly suggest that larger firms more often represent positive associations

between the ‘Return on Assets’ and the ‘Current Ratio’.



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5.5.10 Comparison of OPS-CR Correlations for Small

and Large Companies

28% of small companies in the sample 1 showed a negative relationship between OPS

and CR with 9% of them depicting a significant negative Correlation. In comparison with

that, 34% of large corporations in the sample 2 showed a negative relationship between

the two variables and 17% of them demonstrated a significant negative Correlation.

On the other hand, 72% of small firms displayed a positive Correlation between OPS and

CR and 24% among them signified a significant positive association. Unlike that, 66% of

large companies represented a positive relationship between the two variables and 21% of

them exhibited a significant positive association.

The comparison made above declares that there are more small-sized firms than larger

ones that denote a positive Correlation between the ‘Operating Profit to Sales’ and the

‘Current Ratio’.

Summary of Results of the Comparative Analysis

The results of the comparisons, being made in the preceding section, of the Profitability-

WCM and Profitability-Liquidity Correlations for SME’s and that for Large Companies

are all summarized in the following lines:

A bigger percentage of large firms show a negative relationship between the

‘Inventory Conversion Period’ and the Return on Assets. On the other hand, small

firms more frequently exhibit a negative relationship between the ‘Inventory

Conversion Period’ and the Operating Profit to Sales.

Larger firms demonstrate more negative relationships (percentage-wise) between

the ‘Receivable Collection Period’ and the Return on Assets. In contrast, smaller

firms are found to have more negative relationships (percentage-wise) between

the ‘Receivable Collection Period’ and the Operating Profit to Sales.

More large-sized firms than small-sized companies (percentage-wise) exhibit a

negative association between the ‘Payable Deferral Period’ and the Return on

Assets. Conversely, more small-sized firms than larger ones (percentage-wise)

signify a negative relationship between the ‘Payable Deferral Period’ and the

Operating Profit to Sales.



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Larger firms more frequently show a positive relationship between the ‘Cash

Conversion Cycle’ and the Return on Assets in contrast with smaller ones. On the

other hand, there are more small-sized firms than large-sized organizations

(percentage-wise) that connote a positive association between the ‘Cash

Conversion Cycle’ and the Operating Profit to Sales.

Larger firms more often exhibit positive associations between the ‘Current Ratio’

and the Return on Assets. Alternatively, there are more small-sized firms than

larger ones that denote a positive Correlation between the ‘Current Ratio’ and the

Operating Profit to Sales.

From the summarized results mentioned above, it is quite evident that, for some firms,

the indicators of WCM and liquidity do not show similar associations with both the

profitability indexes used in the study. In other words, by changing a profitability

measure, many firms exhibit an opposite relationship with WCM and Liquidity

indicators.

Glancing at the overall illustration of the comparison of Individual Company Correlation

analysis presented above, it can be held that the indicators of WCM and liquidity do

influence the profitability of firms of any size. However, the analyses do not give a clear

picture of whether, or not, the impact of WCM & liquidity on the profitability of a firm

has anything to do with its size measured in Sales volume. Hence, we are not certain if

the indicators of WCM & liquidity have more, or less, influence on the profitability of

small, or large, firms or vice versa.

In the next section, we examine the pooled data of both the sample firms by correlating

and regressing the combined data of firms of each sample and then compare the results of

the pooled Correlation and Regression analyses to come up with more significant and

meaningful results.



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5.6 THE DESCRIPTIVE ANALYSES FOR SAMPLES

This portion of the analyses offers the descriptive statistics for samples of small and large

firms included in the study. Divided into two sections, the analyses give details of each

variable of study for the two sample firms separately:

5.6.1 Descriptive Analysis for Sample 1

This section presents the descriptive statistics of the pooled data of all firms included in

sample 1. Table 5.289 gives the mean values and the standard deviation for each variable

in the study. Aside from that, the table also includes the minimum and maximum values

for each variable in order to trace out the extreme values reached by all studied variables.

TABLE 5.289: Descriptive Analysis for Sample 1*

40 Small Non-financial Firms Listed in KSE: (2003-2008) 240 Firm-year Observations

VARIABLES Obs. Mean Minimum Maximum St. Dev.

Return on Assets 240 0.096 -1.232 9.683 0.736

Operating Profit to Sales 238 0.047 -3.760 6.419 0.731

Inventory Conversion Period 240 117.99 0.00 1420.00 154.03

Receivable Collection Period 240 105.94 0.00 2539.67 298.28

Payable Deferral Period 240 461.35 4.89 6675.44 643.25

Cash Conversion Cycle 240 -237.42 -5896.78 2611.02 639.66

Current Ratio 240 2.041 0.024 27.067 3.428

Financial Leverage 240 0.865 0.014 9.118 0.997

Size (Measured by LN Sales) 238 18.372 14.732 19.749 0.957

Sales Growth 240 0.329 -1.000 19.133 1.663

*Source: Calculations based on the Balance Sheet Analysis of firms from 2003 to 2008

The Return on Assets, as per Table 5.289, has a mean value of 9.6% of the total Assets

for all the small firms in sample 1 and its standard deviation is 0.736. The minimum

value for ROA recorded in the analysis is -1.232 and the maximum is 9.683.

The mean value of Operating Profit to Sales ratio for firms in sample 1 is 0.047 and the

standard deviation is 0.731. The minimum value of Operating Profit to Sales is -3.760 for

a firm in a year of study and the maximum value is 6.419.

Firms in Sample 1 take, on average, 118 days to sell inventory with a standard deviation

of 154 days. There are a few firms that do not keep inventory at all and the minimum



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time to sell inventory for them is 0 days. On the other hand, the maximum time ever

taken by any sample firm in the course of study to sell its inventory is 1420 days.

Companies in sample 1 receive payments against sales in an average time period of 106

days but the standard deviation is 298 days which means many firms deviate, to a fairly

great extent, from the mean value. Some firms probably do not engage themselves in

credit sales and thus the minimum time to collect proceeds from sales for any firm in

sample 1 is 0 days whereas the maximum time is 2540 days.

Firms in sample 1 pay for their bills, on average, in 461 days with the standard deviation

of 643 days. The minimum time for any firm to pay back its liabilities in any year is 5

days and the maximum is 6675 days.

The mean value of the Cash Conversion Cycle for firms in sample 1 is -237 days and the

standard deviation is 640 days. The minimum and maximum recorded values for CCC are

-5897 days and 2611 days respectively.

The average Current Ratio for companies in sample 1 is 2.041 with a standard deviation

of 3.428. The least Current Ratio recorded for any firm during any year is 0.024 while the

maximum is 27.067.

Financial Leverage is used as a control variable to examine the impact of debt financing

used by a firm over its profitability. The average debt ratio or financial leverage for any

firm in sample 1 is 0.865 and the standard deviation is 0.997. The minimum and

maximum values recorded for Financial Leverage of sample firms during the years of

study are 0.014 and 9.118 respectively.

To measure the effect of firm size over its profitability, Natural Logarithm of sales of

each firm is calculated as an indicator of the size of the firm. The mean value of size of

firms in sample 1 is 18.372 with a standard deviation of 0.957. The smallest firm in the

sample has a Natural Log of 14.732 for a year and the largest firm has a Log of 19.749.

To analyze the impact of the growth in sales for any firm over its profitability, the Sales

Growth ratio has been worked out as a control variable for each firm for every year of

study. The average growth in sales recorded for firms in sample 1 is 0.329 and the

standard deviation is 1.663. The minimum sales growth for any firm during the course of

study is -1 and the maximum recorded growth in sales is 19.133.



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5.6.2 Descriptive Analysis for Sample 2

This section gives the descriptive details of the pooled data of all firms included in

sample 2. Table 5.290 gives the mean values and the standard deviation for each variable

in the study. Aside from that, the table also includes the minimum and maximum values

for each variable in order to trace out the extreme values achieved by all variables during

the years of study.

TABLE 5.290: Descriptive Analysis for Sample 2*

103 Large Non-financial Firms Listed in KSE: (2003-2008) 618 Firm-year Observations

VARIABLES Obs. Mean Minimum Maximum St. Dev.

Return on Assets 618 0.108 -0.295 0.636 0.119

Operating Profit to Sales 618 0.128 -0.308 4.225 0.217

Inventory Conversion Period 618 69.34 0.00 457.69 58.93

Receivable Collection Period 618 29.68 0.00 293.10 30.27

Payable Deferral Period 618 197.96 19.25 2578.76 163.50

Cash Conversion Cycle 618 -98.94 -2439.13 116.88 157.89

Current Ratio 618 1.465 0.177 8.432 0.982

Financial Leverage 618 0.591 0.082 1.646 0.194

Size (Measured by LN Sales) 618 22.790 18.394 27.092 1.127

Sales Growth 618 0.242 -0.527 11.187 0.658

*Source: Calculations based on the Balance Sheet Analysis of firms from 2003 to 2008

The Return on Assets, as per Table 5.290, has a mean value of 0.108 for all the large

firms in sample 2 and its standard deviation is 0.119. The minimum value for ROA

recorded in the analysis is -0.295 and the maximum value is 0.636.

The mean value of Operating Profit to Sales ratio for firms in sample 2 is 0.128 and the

standard deviation is 0.217. The minimum value of Operating Profit to Sales is -0.308 for

a firm in a year of study and the maximum value is 4.225.

Firms in Sample 2 take, on average, 69 days to sell inventory with a standard deviation of

59 days. There are a few firms that do not keep inventory at all and the minimum time to

sell inventory for them is 0 days. On the other hand, the maximum time ever taken by any

sample firm in the course of study to sell its inventory is 458 days.



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Companies in sample 2 receive payments against sales in an average time period of 30

days and the standard deviation of values from the mean is also 30 days. Some firms

probably do not engage themselves in credit sales and thus the minimum time to collect

proceeds from sales for any firm in sample 2 is 0 days whereas the maximum time is 293

days.

Firms in sample 2 pay for their bills, on average, in 198 days with a standard deviation of

164 days. The minimum time for any firm to pay back its liabilities in any year is 19 days

and the maximum is 2579 days.

The mean value of the Cash Conversion Cycle for firms in sample 2 is -99 days and the

standard deviation is 158 days. The minimum and maximum recorded values for CCC are

-2439 days and 117 days respectively.

The average Current Ratio for companies in sample 2 is 1.465 with a standard deviation

of 0.982. The least Current Ratio recorded for any firm during any year is 0.177 while the

maximum is 8.432.

The average debt ratio or Financial Leverage for firms in sample 2 is 0.591 and the

standard deviation is 0.194. The minimum and maximum values recorded for Financial

Leverage of sample firms during the years of study are 0.082 and 1.646 respectively.

The mean value of the Size of firms in sample 2 is 22.790, measured by the Natural

Logarithm of Sales, with a standard deviation of 1.127. The smallest firm in the sample

has a Natural Log of 18.394 for a year and the largest firm has a Log of 27.092.

The average growth in sales recorded for firms in sample 2 is 0.242 and the standard

deviation is 0.658. The minimum sales growth recorded for any firm during the course of

study is -0.527 and the maximum growth in sales is found to be 11.187.



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5.7 THE QUANTITATIVE ANALYSES FOR SAMPLES

This section offers en bloc quantitative analyses for the two samples. The analyses further

include two distinct methods of statistical examination. The first portion holds the

Correlation analyses separately done for both the samples to determine the degree of

association between any two variables of study and then mutually compares the results of

the Correlation analyses of the two samples to detect any change(s) in the results being

drawn. The second portion contains the Regression analyses for both the samples and for

each of the profitability indicator separately and concludes by comparing the results of

the regression analyses of the two sample firms.

5.7.1 The Correlation Analysis for Sample 1

The Pearson Product Moment Coefficient of Correlation was used to examine the

relationship between the variables of study for sample 1. Since two profitability variables

were used in the study, the relationship of both of them with the independent variables is

explained separately in this section. The results of the Correlation analysis of sample 1

are described below:

5.7.1.1 Results of the Correlation Analysis between the

Profitability Indicators and the Inventory Conversion Period

The results of the Correlation analysis between the Inventory Conversion Period and the

Return on Assets show a negative coefficient of -0.044 and the p-value is (0.494) which

means that the result is not significant at all.

However, the results of the Correlation analysis between the Inventory Conversion Period

and the Operating Profit to Sales depict a significant negative coefficient of -0.153. The

p-value is (0.018) which denotes that the result is significant at ά = 5%. The results

suggest that in order to augment profitability, Inventory Conversion Period must be kept

as short as possible.


Profitability Indicators and the Receivable Collection Period

The results of the Correlation analysis between the Receivable Collection Period and the

Return on Assets also show a negative coefficient of -0.043 with a p-value of (0.511)

which indicates that the result is not at all significant.



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However, the results of the Correlation analysis between the Receivable Collection

Period and the Operating Profit to Sales depict a very significant negative coefficient of -

0.191. The p-value is (0.003) which denotes that the result is significant at ά = 1%. The

results suggest that collecting receivables on time enhances the profitability of firms of

sample 1.


Profitability Indicators and the Payable Deferral Period

The results of the Correlation analysis between the Payable Deferral Period and the

Return on Assets also show a negative coefficient of -0.016 but the p-value is as large as

(0.803) which indicates that the result is not at all significant.

Similarly, the results of the Correlation analysis between the Payable Deferral Period and

the Operating Profit to Sales also depict an insignificant negative coefficient of -0.047.

The p-value is (0.473) which portrays that the result is too far from the minimum

significance level. Hence, no significant relationship is made between the Payable

Deferral Period and the profitability variables for firms in sample 1 as a whole.


Profitability Indicators and the Cash Conversion Cycle

The results of the Correlation analysis between the Cash Conversion Cycle and the

Return on Assets also show a negative coefficient of -0.014 but the p-value is (0.826)

which indicates that the result is not at all significant.

Similarly, the results of the Correlation analysis between the Cash Conversion Cycle and

the Operating Profit to Sales also depict an insignificant negative coefficient of -0.080.

The p-value is (0.217) which tells that the result is not a reliable one. Overall, we see that

no significant association exists between the Cash Conversion Cycle and the profitability

indicators for firms in sample 1.


Profitability Indicators and the Current Ratio

The Current Ratio and the Return on Assets have a negative but an insignificant

Correlation coefficient of -0.014. The p-value is (0.826).

Similarly, the results of the Correlation analysis between the Current Ratio and the

Operating Profit to Sales also describe an insignificant negative coefficient of -0.059. The



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p-value is (0.361) which signifies that the result is not a reliable one. Hence, no

significant association exists between the Current Ratio and the profitability indicators

for firms in sample 1.


Profitability Indicators and the Financial Leverage

The relationship between the Financial Leverage and the Return on Assets is found to be

positive but not significant. The Correlation coefficient is 0.104 and the p-value is

(0.109).

Similarly, the results of the Correlation analysis between the Financial Leverage and the

Operating Profit to Sales also describe an insignificant positive coefficient of 0.069. The

p-value is (0.292) which signifies that the result is not a significant one. Hence, no

established relationship could be made between Financial Leverage and the indicators of

profitability for firms in sample 1.


Profitability Indicators and the Firm Size

In contrast with most of the previous studies, the relationship between the size of the firm

(measured by the Natural Logarithm of Sales) and the Return on Assets is found to be

slightly negative but not significant. The Correlation coefficient is -0.021 and the p-value

is (0.742) which indicates a highly insignificant association

On the other hand, the results of the Correlation analysis between the firm size and the

Operating Profit to Sales describe another story. The coefficient of Correlation is

significant and positive at 0.144. The p-value is (0.026) which signifies that the result is

significant at ά = 5%.


Profitability Indicators and the Sales Growth

The relationship between the Sales Growth and the Return on Assets is found to be

positive but not significant. The Correlation coefficient is 0.010 and the p-value is (0.876)

which indicates a highly insignificant association

In contrast, the results of the Correlation analysis between the Sales Growth and the

Operating Profit to Sales are found to be negative. The Correlation coefficient is -0.019

but the p-value is (0.771) which again demonstrates a highly insignificant Correlation.



323

TABLE 5.291: Quantitative Analysis: The Correlation Matrix for Sample 1



324

5.7.2 The Correlation Analysis for Sample 2

The Pearson Product Moment Coefficient of Correlation was used, for sample 2 as well,

to see the relationship between the variables of study. Since two profitability variables

were used for sample 2 also, the relationship of both of them with the independent

variables is explained separately in this section. The results of the Correlation analysis for

sample 2 are described below:


Profitability Indicators and the Inventory Conversion Period

The results of the Correlation analysis between the Inventory Conversion Period and the

Return on Assets show a negative coefficient of -0.136 and the p-value is (0.001) which

means that the result is highly significant at ά = 1%.

However, the results of the Correlation analysis between the Inventory Conversion Period

and the Operating Profit to Sales depict a non-significant negative coefficient of -0.002.

The p-value is (0.954) which denotes that the result is not at all significant. The result

suggests that the Inventory Conversion Period must be kept short to enhance profitability.


Profitability Indicators and the Receivable Collection Period

The results of the Correlation analysis between the Receivable Collection Period and the

Return on Assets show a negative coefficient of -0.299 with a p-value of (0.000) which

clearly indicates that the result is highly significant at ά = 1%.

In the same manner, the results of the Correlation analysis between the Receivable

Collection Period and the Operating Profit to Sales also depict a very significant negative

coefficient of -0.108. The p-value is (0.007) which denotes that the result is significant at

ά = 1%. The result suggests that collecting receivables on time enhances the profitability

of firms of sample 1.


Profitability Indicators and the Payable Deferral Period

The Correlation analysis between the Payable Deferral Period and the Return on Assets

also show a highly significant negative coefficient of -0.185 with a p-value of (0.000)

meaning that the significance level is below 1%.



325

In contrast, the results of the Correlation analysis between the Payable Deferral Period

and the Operating Profit to Sales depict a highly significant positive coefficient of 0.574.

The p-value is (0.000) which portrays that the result is fully significant at ά = 1%.


Profitability Indicators and the Cash Conversion Cycle

The results of the Correlation analysis between the Cash Conversion Cycle and the

Return on Assets show a slightly positive coefficient of 0.084 and the p-value is (0.037)

which indicates that the result is significant at ά = 5%.

On the other hand, the results of the Correlation analysis between the Cash Conversion

Cycle and the Operating Profit to Sales depict a hugely negative coefficient of -0.616.

The p-value is (0.000) leading to the conclusion that it is highly significant at ά = 1%.


Profitability Indicators and the Current Ratio

The Current Ratio and the Return on Assets are found to have a positive and a significant

Correlation coefficient of 0.360. The p-value is (0.000) and so ά = 1%.


Operating Profit to Sales also describe a significant positive coefficient of 0.233. The p-

value is (0.000) which signifies that the result is significant at ά = 1%.


Profitability Indicators and the Financial Leverage

The relationship between the Financial Leverage and the Return on Assets is found to be

significantly negative. The Correlation coefficient is -0.431 and the p-value is (0.000)

meaning that the result is significant at ά = 1%.


Operating Profit to Sales also describe a significant negative coefficient of -0.087. The p-

value is (0.031) which signifies that the result is significant at ά = 5%.


Profitability Indicators and the Firm Size

The relationship between the size of the firm (measured by the Natural Logarithm of

Sales) and the Return on Assets is found to be significantly positive. The Correlation



326

coefficient is 0.117 and the p-value is (0.003) which indicates a highly significant

association at ά = 1%.

On the other hand, the results of the Correlation analysis between the firm size and the

Operating Profit to Sales describe another story. The coefficient of Correlation is

significant but negative at -0.178. The p-value is (0.000) which signifies that the result is

significant at ά = 1%.


Profitability Indicators and the Sales Growth

The relationship between the Sales Growth and the Return on Assets is found to be

slightly positive but not significant. The Correlation coefficient is 0.009 and the p-value

is (0.824) which indicates a highly insignificant association

In the same manner, the results of the Correlation analysis between the Sales Growth and

the Operating Profit to Sales are also found to be slightly positive. The coefficient of

Correlation is 0.001 and the p-value is (0.988) which again demonstrates an extremely

insignificant Correlation.



327

TABLE 5.292: Quantitative Analysis: The Correlation Matrix for Sample 2



328

5.7.3 Comparison of the Correlation Analysis for

Sample 1 and that for Sample 2

By comparing the two Correlation analyses just described, following dissimilarities were

found in the mutual associations of the liquidity and the indicators of WCM with that of

the profitability for the two samples:

Although the Correlation coefficient between the ICP and profitability for sample

1 (-0.153) was slightly more than that for sample 2 (-0.136), the significance level

for sample 2 (ά = 1%) was higher than that for sample 1 (ά = 5%).

For sample 1, a highly significant negative association was found between the

RCP and one of the profitability variables (-0.191 at ά = 1%). However, for

sample 2, a very high and significant negative relationship was found between the

RCP and both of the profitability variables (-0.299 at ά = 0% and -0.108 at ά =

1%). Hence, one might conclude that there exists a stronger negative link between

RCP and profitability for larger firms.

No significant association was found between the PDP and profitability variables

for small firms. As for large firms the results were confusing. A significant

negative relationship was found between the PDP and the ROA (-0.185 at ά =

0%) on the one hand and a significant positive association was discovered

between the PDP and the OPS (0.574 at ά = 0%) on the other. The results,

nonetheless, suggest that PDP is probably more an issue of concern for larger

firms for it does affect their profitability significantly.

There exists no established relationship (as far as firms of sample 1 are

concerned) between the CCC and profitability indicators. Large firms, however,

exhibit a weak positive association between the CCC and ROA (0.084 with p-

value of 0.037) but a very strong and very significant negative relationship

between the CCC and the OPS (-0.616 at ά = 0%). Hence, it is safe to conclude

that CCC has a strong negative link with the profitability of large firms.

No significant relationship is found between the Current Ratio and the variables

of profitability for small firms in sample 1. In contrast, large firms depict very

significant positive associations between the CR and the indicators of their

profitability (0.360 and 0.233 both at ά = 0%). Although past theories suggest a



329

negative relationship between liquidity and profitability, the results of the analysis

of large firms represent the opposite of that.

Small firms exhibit no significant relationship between Financial Leverage and

the profitability variables. Whereas, large firms show a strong and significant

negative associations between the two (-0.431 at ά = 0% and -0.087 at ά = 5%).

Small firms show a significant positive link between the firm size and profitability

(0.144 at ά = 5%). Large companies, on the other hand, show both significant

positive and significant negative associations between the firm size and

profitability indicators. For example, the relationship is highly significant 0.117

between firm size and ROA and highly significant -0.178 between firm size and

OPS.

An overall vision of the comparison made above virtually suggests that the indicators of

working capital management and that of liquidity have a more profound impact on the

profitability of firms of relatively larger size.

In order to throw more light on the interrelationship between the elements of working

capital management and profitability of sample organizations and to better compare the

effects of WCM on the output of small and large-sized companies, the regression

analyses are performed in the ensuing pages.



330

5.7.4 The Regression Analysis ‘A’ for Sample 1

In the Regression analysis A for Sample 1, the indicators of working capital management

and liquidity of sample 1 are regressed against the ‘Return on Assets’. A total of five

regressions are made to investigate the determinants of ROA for all 240 firm-year

observations. The results of the Regression analysis ‘A’ for sample 1 are shown in Table

5.293 given below and described on the next pages:

TABLE 5.293: Linear Regressions for Sample 1 with ‘Return on Assets’ as a Dependent Variable

The Regression Analysis A: Linear Regressions for Sample 1 Dependent Variable: Return on Assets

40 Small-sized Non-Financial Firms listed in KSE (2003 to 2008), 240 Firm-year Observations

VARIABLES Reg. 1 Reg. 2 Reg. 3 Reg. 4 Reg. 5 (Constant) Beta 0.030 0.086 0.733 0.102 -0.184

p-value

(0.977) (0.937) (0.543) (0.924) (0.854)

Current Ratio Beta 0.031 0.053 0.014 0.005 0.030

p-value

(0.660) (0.499) (0.838) (0.946) (0.670)

Financial Leverage

Beta 0.112 0.111 0.162 0.149 0.116

p-value

(0.128) (0.133) (0.045) (0.076) (0.112)

Size (Measured by LN Sales)

Beta 0.000 -0.005 -0.048 -0.006 0.014

p-value

(0.994) (0.948) (0.561) (0.936) (0.844)

Sales Growth Beta 0.003 -0.001 0.000 0.006 0.005

p-value

(0.959) (0.985) (0.991) (0.927) (0.942)

Inventory Conversion Period

Beta -0.046 - - - -

p-value

(0.503) - - - -

Receivable Collection

Beta - -0.054 - - -

p- - (0.504) - - -



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5.7.4.1 Results of Regression 1

The Regression 1 is run to explore the relationship between the Return on Assets and the

Inventory Conversion Period for sample 1. The Regression shows an insignificant

negative association of -0.046 between the two variables. The Current Ratio, Financial

Leverage, Firm Size and Sales Growth are all insignificantly related with the Return on

Assets in Regression 1. The coefficient of C (connoting the amount of the dependent

variable when all the independent variables are zero) is 0.030 but not significant at all.

The adjusted R square (which is the percentage of variance in the dependent variable

accounted for by the independent variables) has a very low value of -0.008. All together,

the regression is insignificant as the F-Statistic (which is meant to check the significance

of the Adjusted R Square) is just 0.627.


In Regression 2, the Inventory Conversion Period is replaced by the Receivable

Collection Period. This Regression also shows an insignificant negative relationship of -

0.054 between the RCP and the ROA. The Current Ratio, Financial Leverage, Firm Size

and Sales Growth are all insignificantly related with the Return on Assets. The coefficient

of C is 0.086 but not significant at all. The adjusted R square has a very low value of -

0.008. In chorus the regression is totally insignificant as the F-Statistic is just 0.626.


The third Regression is run using the Payable Deferral Period as a replacement for the

Receivable Collection Period. This Regression also shows an insignificant negative

Period value Payable Deferral Period

Beta - - -0.126 - -

p-value

- - (0.173) - -

Cash Conversion Cycle

Beta - - - 0.075 -

p-value

- - - (0.425) -

Adjusted R Square -0.008 -0.008 -0.002 -0.007 -0.006

F-Statistic 0.627 0.626 0.914 0.665 0.672



332

association of -0.126 between the PDP and the ROA. The Current Ratio, Firm Size and

Sales Growth are all insignificantly related with the Return on Assets. The Financial

Leverage, however, has a significant positive association with the profitability variable.

The coefficient of C is 0.733 but not significant at all. The adjusted R square has a very

low value of -0.002. All-together, the regression is entirely insignificant as the F-Statistic

is just 0.914.


In the fourth Regression, the Payable Deferral Period is replaced by the Cash Conversion

Cycle. This Regression shows an insignificant positive association of 0.075 between the

CCC and the ROA. The Current Ratio, Firm Size and Sales Growth are all insignificantly

related with the Return on Assets. The Financial Leverage, however, has a slightly

significant positive association with the profitability variable. The coefficient of C is

0.102 but not significant at all. The adjusted R square has a very low value of -0.007. As

a whole, the regression is absolutely insignificant as the F-Statistic is just 0.665.


In Regression 5, all the indicators of working capital management are excluded in order

to separately measure the impact of Current Ratio (liquidity) on the Return on Assets.

This Regression shows an insignificant positive association of 0.030 between the CR and

the ROA. The Financial Leverage, Firm Size and Sales Growth are all insignificantly

related with the Return on Assets. The coefficient of C is -0.184 but not significant at all.

The adjusted R square has a very low value of -0.006. As a whole, the regression is

absolutely insignificant as the F-Statistic is just 0.672.

5.7.5 The Regression Analysis ‘A’ for Sample 2

In the Regression analysis A for Sample 2, the indicators of working capital management

and liquidity are regressed against the ‘Return on Assets’ for sample 2. A total of five

regressions are made (from Regression 6 - 10) to investigate the determinants of ROA for

all 618 firm-year observations. The results of the Regression analysis ‘A’ for sample 2

are shown in Table 5.294 and described below:




333

The Regression 6 is run to explore the relationship between the Return on Assets and the

Inventory Conversion Period for sample 2. The Regression shows an insignificant

negative association of -0.051 between the two variables. The Current Ratio and Firm

Size are found to have a very significant relationship with the Return on Assets and the

Financial Leverage has a significant negative association. The Sales growth, however,

has an insignificant relationship with the profitability variable. The coefficient of C is -

0.072 but not significant at all. The adjusted R square has a value of 0.207. All-together,

the regression is significant as the F-Statistic is 33.178.

TABLE 5.294: Linear Regressions for Sample 2 with ‘Return on Assets’ as a Dependent Variable



334


The Regression Analysis A: Linear Regressions for Sample 2 Dependent Variable: Return on Assets

103 Large-sized Non-Financial Firms listed in KSE (2003 to 2008), 618 Firm-year Observations

VARIABLES Reg. 6 Reg. 7 Reg. 8 Reg. 9 Reg. 10 (Constant) Beta -0.072 -0.063 -0.105 -0.125 -0.117

p-value

(0.457) (0.476) (0.262) (0.173) (0.202)


p-value

(0.007) (0.008) (0.012) (0.009) (0.011)

Financial Leverage

Beta -0.333 -0.308 -0.340 -0.355 -0.347

p-value

(0.000) (0.000) (0.000) (0.000) (0.000)


Beta 0.118 0.119 0.131 0.139 0.136

p-value

(0.002) (0.001) (0.000) (0.000) (0.000)

Sales Growth Beta 0.014 -0.004 0.015 0.016 0.016

p-value

(0.698) (0.911) (0.687) (0.648) (0.666)


Beta -0.051 - - - -

p-value

(0.190) - - - -

Receivable Collection Period

Beta - -0.226 - - -

p-value

- (0.000) - - -


Beta - - -0.021 - -

p-value

- - (0.593) - -


Beta - - - -0.042 -

p-value

- - - (0.255) -

Adjusted R Square 0.207 0.254 0.205 0.206 0.206

F-Statistic 33.178 43.044 32.815 33.071 40.994



335


Collection Period. This Regression demonstrates a highly significant negative

relationship of -0.226 (at ά = 0.000) between the RCP and the ROA. The Current Ratio

and Firm Size are also found to have a very significant relationship with the Return on

Assets and the Financial Leverage has a significant negative association. The Sales

growth, however, has an insignificant relationship with the profitability variable. The

coefficient of C has a value of -0.063 but not significant at all. The adjusted R square is

0.254. The regression model as a whole is very significant as the F-Statistic is 43.044.


The eighth Regression is run using the Payable Deferral Period as a replacement for the

Receivable Collection Period. This Regression shows an insignificant negative

association of -0.021 between the PDP and the ROA. The Current Ratio and Firm Size

are found to have a very significant relationship with the Return on Assets and the

Financial Leverage has a significant negative association. The Sales growth, however,

has an insignificant relationship with the profitability variable. The coefficient of C has a

value of -0.105 and is insignificant. The adjusted R square is 0.205. All-together, the

regression is significant as the F-Statistic is 32.815.


In the ninth Regression, the Payable Deferral Period is replaced by the Cash Conversion

Cycle. This Regression shows an insignificant negative association of -0.042 between the

CCC and the ROA. The Current Ratio and Firm Size are found to have a very significant

relationship with the Return on Assets and the Financial Leverage has a significant

negative association. The Sales Growth, however, has an insignificant relationship with

the profitability variable. The coefficient of C is -0.125 and is insignificant. The adjusted

R square has a value of 0.206. The regression model is significant overall as the F-

Statistic is 33.071.



to separately measure the impact of Current Ratio (liquidity) on the Return on Assets.

This Regression shows a significant positive association of 0.127 (at ά = 0.011) between

the CR and the ROA. The Firm Size also has a very significant relationship with the



336

Return on Assets and the Financial Leverage has a significant negative association. The

Sales Growth, however, has an insignificant relationship with the profitability variable.

The coefficient of C is -0.117 but not significant at all. The adjusted R square has a value

of 0.206. All-together, the regression is very significant as the F-Statistic is 40.994.

5.7.6 Comparison of the Regression Analysis ‘A’ for


While comparing the results of the Regression analysis ‘A’ performed separately for

Sample 1 and Sample 2, following consequences were drawn:

No significant associations were detected between the indicators of WCM &

liquidity and the Return on Assets for Sample 1 in the Regression analysis ‘A’. As

for Sample 2, one of the WCM indicators, i.e. the Receivable Collection Period,

was found to be negatively related with the Return on Assets with a very high

degree of significance.

None of the regressions run in the analysis displayed a significant association

between the Current Ratio and the Return on Assets for Sample 1. Conversely, all

the regressions made for Sample 2 evidenced a highly significant, but positive,

relationship between the CR and the ROA for large firms.

A significant positive association was found between the Financial Leverage and

the Return on Assets for Sample 1 in only two of the five regressions. Moreover,

none of the regressions showed a significant association between the Firm size

and the ROA for Sample 1. On the other hand, all the regressions made for

Sample 2 depicted highly significant negative associations between ROA and

Financial Leverage and highly significant positive relationships between ROA

and the Firm size.

The comparison indicates a slightly stronger relationship between the efficient

management of working capital and the Return on Assets for Sample 2 in contrast with

that for sample 1 which shows no significant relationships at all between the ROA and

the variables of WCM.



337

The comparison also evidences an enormous difference between the effect of liquidity on

the Return on Assets of large firms and that of its impact on the ROA of small firms. As

could be noticed, all the regressions pointed towards a significant association between the

two variables (the CR and the ROA) for large firms in Sample 2. On the other hand, none

of the regressions in the analysis ‘A’ exhibited the same significant link for firms in

Sample 1. Hence, liquidity seems to be a more crucial profit-determining factor for larger

firms.

5.7.7 The Regression Analysis ‘B’ for Sample 1

In the Regression analysis B for Sample 1, the indicators of working capital management

and liquidity are regressed against the ‘Operating Profit to Sales’ for sample 1. A total of

five regressions are made (from Regression 11 - 15) to investigate the determinants of

OPS for all 240 firm-year observations. The results of the Regression analysis ‘B’ for

sample 1 are shown in Table 5.295 given below and described in the next pages:

The Regression Analysis B: Linear Regressions for Sample 1



338

Dependent Variable: Operating Profit to Sales 40 Small-sized Non-Financial Firms listed in KSE (2003 to 2008), 240

Firm-year Observations VARIABLES Reg. 11 Reg. 12 Reg. 13 Reg. 14 Reg. 15

(Constant) Beta -1.963 -1.650 -2.360 -3.029 -2.491

p-value

(0.057) (0.117) (0.047) (0.004) (0.012)

Current Ratio Beta -0.007 0.063 -0.012 0.037 -0.010

p-value

(0.916) (0.414) (0.864) (0.625) (0.887)

Financial Leverage

Beta 0.105 0.099 0.122 0.054 0.116

p-value

(0.146) (0.172) (0.125) (0.509) (0.110)


Beta 0.143 0.118 0.167 0.213 0.176

p-value

(0.043) (0.107) (0.042) (0.003) (0.010)

Sales Growth Beta -0.019 -0.034 -0.016 -0.017 -0.015

p-value

(0.773) (0.598) (0.807) (0.788) (0.816)


Beta -0.114 - - - -

p-value

(0.091) - - - -


Beta - -0.170 - - -

p-value

- (0.032) - - -


Beta - - -0.018 - -

p-value

- - (0.843) - -


Beta - - - -0.142 -

p-value

- - - (0.125) -


F-Statistic 2.241 2.605 1.651 2.135 2.063



339

TABLE 5.295: Linear Regressions for Sample 1 with ‘Operating Profit to Sales’ as a Dependent Variable 5.7.7.1 Results of Regression 11

The Regression 11 is run to explore the relationship between the Operating Profit to Sales

and the Inventory Conversion Period for sample 1. The Regression shows a significant

negative association of -0.114 between the two variables. But the significance level is not

fairly high as the p-value is (0.091). Hence, the result is significant at ά = 0.1 or 10%

level. The Current Ratio, Financial Leverage and Sales Growth are all insignificantly

related with the Operating Profit to Sales. However, there is a significant positive

association found between the Firm Size and the OPS in Regression 11. The coefficient

of C is significant and has a value of -1.963. The adjusted R square is 0.026 and the F-

Statistic is 2.241.



Collection Period. This Regression also shows a significant negative relationship, with a

coefficient of -0.170 and at the significance level of (0.032), between the RCP and the

OPS. The Current Ratio, Financial Leverage, Firm Size and Sales Growth are all

insignificantly related with the Operating Profit to Sales. The coefficient of C is -1.650

and insignificant. The adjusted R square has a value of 0.033. In chorus the regression is

insignificant as the F-Statistic is just 2.605.


The thirteenth Regression is run using the Payable Deferral Period as a replacement for

the Receivable Collection Period. This Regression shows an insignificant negative

association of -0.018 between the PDP and the OPS. The Current Ratio, Financial

Leverage and Sales Growth are all insignificantly related with the Operating Profit to

Sales. The Firm Size, however, has a significant positive association with the profitability

variable. The coefficient of C is -2.360 and significant at ά = 5%. The adjusted R square

has a very low value of 0.014. The F-Statistic has a value of 1.651.




340

In the fourteenth Regression, the Payable Deferral Period is replaced by the Cash

Conversion Cycle. This Regression shows an insignificant negative association of -0.142

between the CCC and the OPS. The Current Ratio, Financial Leverage and Sales Growth

are all insignificantly related with the Operating Profit to Sales. The Firm Size, however,

has a highly significant positive association with the profitability variable. The coefficient

of C is -3.029 and is highly significant. The adjusted R square has a value of 0.023 and

the F-Statistic is 2.135.



to separately measure the impact of Current Ratio (liquidity) on the Operating Profit to

Sales ratio of Sample 1. This Regression shows a highly insignificant negative

association of -0.010 between the CR and the OPS. The Financial Leverage and Sales

Growth are also insignificantly related with the Operating Profit to Sales. The Firm Size,

however, has a highly significant positive association with the profitability variable. The

coefficient of C is -2.491 and is highly significant. The adjusted R square has a fairly low

value of 0.018 and the F-Statistic is 2.063.

5.7.8 The Regression Analysis ‘B’ for Sample 2

In the Regression analysis B for Sample 2, the indicators of working capital management

and liquidity are regressed against the ‘Operating Profit to Sales’ for sample 2. A total of

five regressions are made (from Regression 16 - 20) to investigate the determinants of

OPS for all 618 firm-year observations. The results of the Regression analysis ‘B’ for

sample 2 are shown in Table 5.296 and described below:


The Regression 16 is run to investigate the relationship between the Operating Profit to

Sales and the Inventory Conversion Period for sample 2. The Regression shows a highly

significant negative association of -0.098 with a significance level of (0.020). The

Current Ratio and Financial Leverage have very significant positive associations and the

Firm Size has a highly significant negative relationship with the profitability variable.

The Sales growth, however, has an insignificant relationship with the profitability

variable. The coefficient of C is very significant and has a value of 0.800. The adjusted R



341

square is 0.092 and the F-Statistic is 13.566 which show that the model is significant as a

whole.

The Regression Analysis B: Linear Regressions for Sample 2



342

Dependent Variable: Operating Profit to Sales 103 Large-sized Non-Financial Firms listed in KSE (2003 to 2008), 618

Firm-year Observations VARIABLES Reg. 16 Reg. 17 Reg. 18 Reg. 19 Reg. 20

(Constant) Beta 0.800 0.695 -0.016 0.398 0.647

p-value

(0.000) (0.000) (0.910) (0.002) (0.000)


p-value

(0.000) (0.000) (0.000) (0.000) (0.000)

Financial Leverage

Beta 0.167 0.161 -0.064 0.013 0.142

p-value

(0.002) (0.003) (0.130) (0.729) (0.008)


Beta -0.197 -0.171 -0.023 -0.114 -0.163

p-value

(0.000) (0.000) (0.438) (0.000) (0.000)

Sales Growth Beta -0.010 -0.017 0.024 0.007 -0.007

p-value

(0.788) (0.658) (0.415) (0.799) (0.848)


Beta -0.098 - - - -

p-value

(0.020) - - - -


Beta - -0.112 - - -

p-value

- (0.004) - - -


Beta - - 0.669 - -

p-value

- - (0.000) - -


Beta - - - -0.692 -

p-value

- - - (0.000) -


F-Statistic 13.566 14.176 110.144 141.454 15.481



343

TABLE 5.296: Linear Regressions for Sample 2 with ‘Operating Profit to Sales’ as a Dependent Variable



Collection Period. This Regression also demonstrates a highly significant negative

relationship of -0.112 (at ά = 0.004) between the RCP and the OPS. The Current Ratio

and Financial Leverage are also found to have a very significant positive relationship

with the Operating Profit to Sales, and the Firm Size has a significant negative

association. The Sales growth, however, has an insignificant relationship with the

profitability variable. The coefficient of C has a very significant value of 0.695. The

adjusted R square is 0.096. The regression model as a whole is significant as the F-

Statistic is 14.176.


The eighteenth Regression is run using the Payable Deferral Period as a replacement for

the Receivable Collection Period. The Regression shows a very large coefficient of

association between the PDP and the OPS with full significance --- 0.669 at ά = (0.000).

The Current Ratio also has a significant relationship with the Operating Profit to Sales.

The Financial Leverage, Firm Size and Sales growth, however, have insignificant

relationships with the profitability variable. The coefficient of C has a value of -0.016 and

is insignificant. The adjusted R square is 0.469. The regression in entirety is significant as

the F-Statistic is 110.144.


In the nineteenth Regression, the Payable Deferral Period is replaced by the Cash

Conversion Cycle. This Regression also shows a highly significant and a huge negative

association of -0.692 (at ά = 0.000) between the CCC and the OPS for Sample 2. The

Current Ratio has a significant positive, while the Firm Size has a significant negative,

relationship with the Operating Profit to Sales ratio. The Sales Growth, however, has an

insignificant relationship with the profitability variable. The coefficient of C is 0.398 and

is highly significant. The adjusted R square has a value of 0.532. The regression model is

significant overall as the F-Statistic is 141.454.




344


to separately measure the impact of Current Ratio (liquidity) on the Operating Profit to

Sales ratio for Sample 2. This Regression shows a highly significant positive association

of 0.322 (at ά = 0.000) between the CR and the OPS. The Financial Leverage also has a

very significant positive relationship with the Operating Profit to Sales and the Firm Size

has a significant negative association. The Sales Growth, however, has an insignificant

relationship with the profitability variable. The coefficient of C is 0.647 and is highly

significant. The adjusted R square has a value of 0.086. All-together, the regression is

significant as the F-Statistic is 15.481.

5.7.9 Comparison of the Regression Analysis ‘B’ for


By comparing the results of the Regression analysis ‘B’ for Sample 1 and that for Sample

2, following deductions were made:

There was a significant negative association found between OPS and the

Inventory Conversion Period and between OPS and the Receivable Collection

Period for firms in Sample 1. The sample, however, could not establish any

significant relationship between OPS and the Payable Deferral Period, OPS and

the Cash Conversion Cycle and between OPS and the Current Ratio. On the other

hand, firms in Sample 2 exhibited very strong and significant associations

between OPS and all of the WCM and Liquidity indicators included in the study.

The coefficient of relationship between Inventory Conversion Period and OPS for

Sample 1 (-0.114) was a bit larger than that between the same variables for firms

in Sample 2 (-0.098). But the reliability of the relationship between ICP and OPS

for larger firms (ά = 0.020) was stronger than the one that existed between the

given variables for smaller firms (ά = 0.091).

As for the relationship between OPS and the Receivable Collection Period for the

two samples, the coefficient of association for smaller firms (-0.170) was larger

than that for larger firms (-0.112). But the reliability of association between RCP

and OPS for larger firms (ά = 0.004) was much stronger than the one that existed

between the given variables for smaller firms (ά = 0.032).



345

None of the five regressions in the Regression analysis ‘B’ for Sample 1

witnessed a significant association between the Current Ratio and the Operating

Profit to Sales ratio for small-sized organizations. In contrast, all of the five

regressions in the Regression analysis ‘B’ for Sample 2 demonstrated a strong and

significant, but positive, link between the liquidity indicator and the OPS.

The size of the firm was found to be positively associated with the OPS of small

firms but negatively related with the OPS of larger organizations, surprisingly.

The above comparison presents quite visible differences between the effects of working

capital management and liquidity on the profitability (measured by the Operating Profit

to Sales ratio) of small and that of the large organizations.

Chapter 6 Conclusion


313

CHAPTER 6

CONCLUSION

Based on the Individual Company Correlation Analysis for Sample 1 and that for Sample

2, the Correlation analysis of pooled data for Sample 1 and Sample 2 and the Regression

analysis of pooled data for Sample 1 and for Sample 2, following deductions are drawn:

Results of the Correlation analyses of individual companies of Sample 1 indicate

that profitability is negatively correlated with the ‘Receivable Collection Period’

and the ‘Payable Deferral Period’ of a majority of small firms in the study. Also,

the ‘Current Ratio’ was found to be positively associated with the profitability

measures of a vast majority of small firms in the sample.

Results of the Correlation analyses of individual companies of Sample 2 reveal

that profitability is negatively associated with the ‘Receivable Collection Period’

and positively linked with the liquidity of most of the large firms involved in the

study. However, results of the Correlation analysis of individual companies of the

given samples did not present a clear picture of whether the indicators of WCM &

liquidity have more, or less, influence on the profitability of small, or large, firms

or vice versa.

The Correlation matrix of the pooled data of Sample 1 exhibited strong negative

relationships of the ‘Inventory Conversion Period’ and the ‘Receivable Collection

Period’ with the ‘Operating Profit to Sales’ of small firms. However, no

significant associations were found between the profitability measures and the

Payable Deferral Period, Cash Conversion Cycle & Current Ratio. On the other

hand, the Correlation matrix of the pooled data of Sample 2 demonstrated very

significant relationships of the profitability measures with the ‘Inventory

Conversion Period’, ‘Receivable Collection Period’, ‘Payable Deferral Period’,

‘Cash Conversion Cycle’ & ‘Current Ratio’. Thus a comparison of the Correlation

analysis of the two samples virtually suggests that the indicators of working



314

capital management and that of liquidity have a more profound impact on the

profitability of firms of relatively larger size.

Studying the results of the Regression Analysis ‘A’, no significant associations

were detected between the indicators of WCM & liquidity and the Return on

Assets for Sample 1. As for Sample 2, one of the WCM indicators, i.e. the

Receivable Collection Period, was found to be negatively related with the Return

on Assets with a very high degree of significance.

The most differentiating results for the two samples were found in the Regression

analysis ‘B’. For Sample 1, a weak but significant relationship was found between

the Inventory Conversion Period and the Operating Profit to Sales and a highly

significant negative association was discovered between the Receivable

Collection Period and the OPS. However, the Payable Deferral Period and Cash

Conversion Cycle had no significant link with the profitability variable. On the

other hand, the pooled data of Sample 2 displayed highly significant relationships

of OPS with all the indicators of working capital management including the ICP,

RCP, PDP and the CCC. This is a clear indication of the fact that the efficiency of

managing working capital has more positive effect on the profitability of larger

firms.

All of the ten regressions for Sample 1 both in the Regression Analysis ‘A’ and

‘B’ indicated highly insignificant relationships of profitability variables with the

Current Ratio. In contrast, factually all of the ten regressions for Sample 2

revealed highly significant relationships between profitability variables and the

Current Ratio. This obviously points towards the argument that liquidity greatly

affects the profitability of larger firms than smaller ones.

Hence, based on the deductions made above, we;

Reject our Null Hypothesis H0-1 that stated, “Working Capital Management has

no association with Profitability of Small and Medium-sized corporations listed at

Karachi Stock Exchange”, and accept the Alternate Hypothesis H1-1. In fact, as

mentioned before, results of the Correlation analyses of individual companies of



315

Sample 1 imply that profitability has a negative impact on the ‘Receivable

Collection Period’ and ‘Payable Deferral Period’ of a majority of small firms

under study. Moreover, in the pooled data analyses, it was observed that both the

Correlation and the Regression analysis for Sample 1 exhibited significant

negative relationships of the ‘Inventory Conversion Period’ and the ‘Receivable

Collection Period’ with the ‘Operating Profit to Sales’ of small firms. Hence, it

can be held that an efficient management of working capital does have a

significant relationship with the Profitability of Small and Medium-sized

corporations listed at Karachi Stock Exchange.

Reject our Null Hypothesis H0-2 which stated, “Working Capital Management has

no association with the Profitability of Large Joint Stock Companies listed at

Karachi Stock Exchange”, and accept the Alternate Hypothesis H1-2. The results

of our analyses clearly indicate the reverse of the stated assumption. For example,

the Correlation analyses of the pooled data for Sample 2 illustrated very

significant relationships of the profitability measures with the ‘Inventory

Conversion Period’, ‘Receivable Collection Period’, ‘Payable Deferral Period’

and the ‘Cash Conversion Cycle’. Further, results of the Regression analysis ‘A’

for Sample 2 reveal that the Return on Assets has a strong and very significant

negative association with the ‘Receivable Collection Period’ for large firms.

Finally, the Regression analysis ‘B’ for Sample 2 revealed a very significant

association of the Operating Profit to Sales ratio with all the indicators of working

capital management including the Cash Conversion Cycle. All these suggest that

an efficient management of working capital have an extremely significant impact

on the Profitability of Large Corporations listed at Karachi Stock Exchange.

Reject our Null Hypothesis H0-3 that stated, “There is no substantial distinction

between the effect of Working Capital Management on the Profitability of Small

and Large Corporations listed at Karachi Stock Exchange”, and accept the

Alternate Hypothesis H1-3. Looking back at the pooled data analyses for the two

distinct samples, the differentiation in the effect of WCM on the performance of

small and large firms is quite evident. Firstly, the Correlation analysis of small



316

firms (Sample 1) showed that only the ‘Inventory Conversion Period’ and the

‘Receivable Collection Period’ had a significant impact on the profitability of

small companies. Conversely, the Correlation analysis of Sample 2 demonstrated

a significant relationship of all the indicators of WCM with the profitability of

large firms. Secondly, the Regression analysis ‘A’ showed no significant

associations being found between the Return on Assets and the variables of WCM

for Sample 1; however the analysis did discover one significant association of the

‘Receivable Collection Period’ with the ROA for Sample 2. And thirdly, the

results of the Regression analysis ‘B’ displayed even more visible differences.

Practically all the indicators of working capital management were strongly (or

‘significantly’ in a statistical sense) associated with the profitability variable for

Sample 2 compared with only two moderately significant relationships that

existed between the WCM and profitability indicators for Sample 1. All these

evidences are sufficient enough to hold that Working Capital Management has a

more profound impact on the Profitability of large corporations than on the

performance of smaller firms listed in the Karachi Stock Exchange.

Reject our Null Hypothesis H0-4 that stated, “The level of Liquidity has no impact

on the Profitability of Small and Medium Enterprises listed at Karachi Stock

Exchange”, and accept the Alternate Hypothesis H1-4. Results of the Correlation

analyses of individual companies of Sample 1 indicate that 65% of small firms

showed a positive relationship between the Current Ratio (a measure of liquidity)

and the Return on Assets with 27% of them showing a significant positive

relationship. Similarly, 72% of firms in Sample 1 illustrated a positive

relationship between the Current Ratio and the Operating Profit to Sales with 24%

of them representing a significant positive relationship. Hence, it cannot be ruled

out that Liquidity is significantly associated with the Profitability of Small and

Medium Enterprises listed at Karachi Stock Exchange.

Reject our Null Hypothesis H0-5 which stated, “The level of Liquidity has no

impact on the Profitability of Large Corporations listed in Karachi Stock

Exchange”, and accept the Alternate Hypothesis H1-5. In veracity, the results of



317

the overall analyses showed a very strong impact of liquidity on the profitability

of large companies in our sample. Firstly, results of the Correlation analyses of

the pooled data of Sample 2 presented very strong and significant relationships of

the Current Ratio with both the variables of profitability. Secondly, all the

regressions performed in the Regression analysis ‘A’ signaled at a very strong and

significant relationship of the Current Ratio and the Return on Assets. And

thirdly, all the regressions performed in the Regression analysis ‘B’ too revealed a

very significant relationship of the liquidity indicator with the Operating Profit to

Sales ratio. Hence, it can be held that Liquidity is significantly associated with the

Profitability of Large Corporations listed at Karachi Stock Exchange.

Reject our Null Hypothesis H0-6 which stated, “There is no substantial distinction

between the impact of Liquidity on the Profitability of Small and Medium

Enterprises, and that of Large Corporations listed at Karachi Stock Exchange”,

and accept the Alternate Hypothesis H1-6. In fact, the analyses performed in the

study exhibit a vast variation between the impact of liquidity on profitability of

small corporations and that of its impact on the performance of larger companies.

For instance, no significant association was found between the Current Ratio and

either of the profitability variables in the Correlation analysis for Sample 1. In

contrast, larger firms demonstrated highly significant and strong positive

relationships between their Current Ratio and both of their profitability indicators,

i.e. the ROA and the OPS, in the Correlation analysis for Sample 2. Moreover, not

a single regression in the Regression analyses ‘A’ or ‘B’ was indicative of a

significant relationship (positive or negative) between the Current Ratio and

profitability for firms in Sample 1. On the other hand, all the regressions run with

a view to establish relationships between profitability indicators and those of

WCM and liquidity for Sample 2 exhibited very strong and highly significant

positive associations of the Current Ratio with the Return on Assets and with the

Operating Profit to Sales. Thus, it is reasonable to believe that Liquidity has a

significantly different impact on the Profitability of Small and Medium

Enterprises than of Large Corporations listed at Karachi Stock Exchange.

318

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A COMPARATIVE ANALSIS OF THE EFFECT OF WORKING CAPITAL ...… · aspects of short-term finance, particularly the working capital management, is even scarce in a country like ours