Impact of Working Capital Management on the Profitability of the Food and Personal Care Products Companies Listed in Karachi Stock Exchange (Finance)

7/24/2019 Impact of Working Capital Management on the Profitability of the Food and Personal Care Products Companies Li

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IMPACT OF WORKING CAPITAL MANAGEMENT ON THE PROFITABILITY OF THE

FOOD AND PERSONAL CARE PRODUCTS COMPANIES LISTED IN KARACHI

STOCK EXCHANGE.

By

Muhammad Idree

The! u"m!##ed #$ #he %a&u'#y $% #he I(#!#u#e $% Ma(a)eme(# S&!e(&e* Peha+ar* !( Par#!a'

%u'%!''me(# $% #he Re,u!reme(# %$r #he De)ree $%

BBS -F!(a(&e.

I(#!#u#e $% Ma(a)eme(# S&!e(&e* Peha+ar

/012314

Certificate of Approval


2/41

I &er#!%y #ha# I ha5e read THE IMPACT OF WORKING CAPITAL MANAGEMENT ON

FIRM PROFITABILITY "y MUHAMMAD IDREES* a(d #ha# !( my $6!(!$(* #h! +$r7

mee# #he &r!#er!a %$r a66r$5!() a #he! u"m!##ed !( 6ar#!a' %u'%!''me(# $% #he re,u!reme(#

%$r #he BBS -F!(a(&e. 8#hSeme#er a# #he I(#!#u#e $% Ma(a)eme(# S&!e(&e* Peha+ar9

Su6er5!$r

Name: M9 Mar!a Ih#!a,

De!)(a#!$(: Leurer

S!)(a#ure: ;;;;;;;;;;;;;;;;;

C$$rd!(a#$r* Reear&h a(d De5e'$6me(# De6ar#me(#

Name: Dr9 O+a! Mu%#!

S!)(a#ure: ;;;;;;;;;;;;;;;;;


3/41

Declaration

I* here"y de&'are #ha# #he reear&h u"m!##ed #$ R


4/41

Dedication

Th! Reear&h ! ded!&a#ed #$ my 6are(#* Mr < M!9 Sardar Hua!(* "r$#her a(d Fr!e(d

a(d re6eed #ea&her %$r #he!r 6a#!e(&e* u66$r# a(d e(&$ura)eme(#9 A 6e&!a' %ee'!() $%

)ra#!#ude %$r my "r$#her Mr9Ha=ra#Hua!(* Daud a(* M Ea Sardar a(d Ch$#a M Yahya

Sardar9Tha(7 y$u %$r y$ur e(d'e 6rayer a(d mu&h (eeded u66$r# #hr$u)h$u# my #ud!e9

3


5/41

Abstract

E5ery %!rm #r!5e #$ 7ee6 #he!r "u!(e !(#a a(d ru((!()* #$ "e 5!)!'a(# !( d$!() "u!(e

m$$#h'y +$r7!() &a6!#a' 6r$5e #$ "e $% u#m$# !m6$r#a(&e9 I# !m6$r#a(&e ! 6r$5ed "y !#

!m6a $( a %!rm> 6r$%!#a"!'!#y9 I# ! a'$ &a''ed '!%e"'$$d $% #he %!rm "e&aue !# ! (eeded %$r

da!'y $6era#!$( !( a %!rm9 The "a!& )$a' $% #he u(der)$!() #udy !* #$ 7($+ #he &ha()e !(

+$r7!() &a6!#a' !( #he 6r$%!#a"!'!#y $% e$r $% %$$d a(d 6er$(a' &are 6r$du !( Pa7!#a(9

Se&$(dary da#a are &$''eed %$r a am6'e $% ? %$$d a(d 6er$(a' &are 6r$du &$m6a(!e

#ha# are '!#ed !( KSE %$r #he 6er!$d $% year %r$m /003/0189 T$ %!(d #he !(%'ue(&e $%

WCM $( 6r$%!#a"!'!#y* (e# $6era#!() 6r$%!# a(d ROA are ued a de6e(de(# 5ar!a"'e9 Wh!'e

a5era)e &$''e!$( 6er!$d* !(5e(#$ry #ur($5er !( day* a5era)e 6ayme(# dura#!$( a(d CCC are

ued a !(de6e(de(# 5ar!a"'e9 SPSS $%#+are ! ued #$ %!(d #he #a(dard 3 de5!a#!$(* mea(

a(d &$rre'a#!$(9 E35!e+ $%#+are ! em6'$yed #$ %!(d re)re!$( #$ 7($+ #he re'a#!$(h!6

6eer9 The reu'# $% #h! #udy de6! #ha# WCM a%%e 6r$du!5!#y !( #he 6r$%!# $% a %!rm

(e)a#!5e'y9 Whe( #he a5era)e &$''e!$( 6er!$d !(&reae* #he( 6er%$rma(&e $% #he %!rm +!''

u%%er (e)a#!5e* +h!&h dra) d$+( #he 6r$%!#a"!'!#y )au)e d$+(9 I# ! "e&aue $% #he %a #ha#

%!rm h$u'd ($# +a!# #$$ '$() %$r #he!r re&e!5a"'e9 The (e)a#!5e re'a#!$(h!6 $% !(5e(#$ry

#ur($5er !( day mea( #ha# +he( #he 6er!$d $% !(5e(#$ry ! !(&reaed #he 6r$%!#a"!'!#y $% #he

%!rm +!'' de&reae9 The #udy a'$ !(d!&a#e #ha# +!#h #he de&reae !( CCC #he e%%!&!e(&y $%

#he &$m6a(!e !( ear(!() 6r$%!# +!'' !(&reae9 S$ ma(a)er h$u'd ha5e #$ de5e'$6 #he 5a'ue

$% #he %!rm "y de&rea!() #he CCC #$ a( $6#!ma' 'e5e'9 The "u!(e had a'$ #$ ma(a)e #he

+$r7!() &a6!#a' !(e%%!&!e(#'y9

4


6/41

Acknowledgement

I am )ra#e%u' #$ A'm!)h#y ALLAH* Wh$e "'e!() ha5e a'+ay "ee( a $ur&e $%

e(&$ura)eme(# %$r u a(d +h$ )a5e u #he a"!'!#y #$ &$m6'e#e #h! #a79 I a'$ +!h my

hear#!e# #ha(7 #$ my 6are(# +h$ u66$r#ed me %!(a(&!a''y a +e'' a m$ra''y #hr$u)h$u#

my a&adem!& &areer a(d 6ray %$r me a'' #he #!me9 I &a( (e5er #ur( d$+( #he!r e%%$r# #hey 6u#

%$r+ard %$r my "r!)h# a(d 6r$6er$u %u#ure9

I a'$ ded!&a#e #h! d!er#a#!$( #$ my %r!e(d +h$ ha5eu66$r#ed me #hr$u)h$u# #he 6r$&e9

I +!'' a'+ay a66re&!a#e a'' #hey ha5e d$(e*e6e&!a''y

I &a( (e5er %$r)e# )u!da(&e #he e%%$r# $% my hum"'e #ea&her9 I am 5ery #ha(7%u' #$ #hem

+h$ he'6ed me dur!() #he &$ure $% #udy a(d m$#!5a#ed me a'' #he #!me9 I am #ha(7%u' #$ my

u6er5!$r MS9 Mar!a Ih#!a, %$r her 7!(d u66$r# a(d he'6 !( #h! #he!9

Muhammad Idree

5


7/41

List of Acronyms and Abbreviations

WCM W$r7!() Ca6!#a' Ma(a)eme(#

ACP A5era)e C$''e!$( Per!$d

ITID I(5e(#$ry Tur($5er !( Day

APP A5era)e Payme(# Per!$d

CCC Cah C$(5er!$( Cy&'e

IT u# I( T!me

EFOODS E()r$ F$$d '!m!#ed Pa7!#a(

NATF Na#!$(a' F$$d Pa7!#a(

NOPK N$$( Pa7!#a( L#d

RMPL Ra%ha( Ma!=e L#d

SCL Sh!e'd C$r6$ra#!$( L#d

SHE She=a( I(#er(a#!$(a' L#d

UPEL U(!'e5er F$$d Pa7!#a( L#d

MFFL M!#h&he'' Fru!# L#d

6


8/41

Table of Contents

De&'ara#!$(99999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999!!

Ded!&a#!$(99999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999!!!

A"#ra!5

A&7($+'ed)eme(#9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999995

L!# $% A&r$(ym a(d A""re5!a#!$(99999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999995!

Ta"'e $% C$(#e(#9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999995!!

L!# $% Ta"'e9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999!

Cha6#er 1: I(#r$du!$(999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999991

191 Ba&7)r$u(d $% #he #udy:9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999/

19/ F$$d a(d Per$(a' &are 6r$du e$r -Pa7!#a(.9999999999999999999999999999999999999999999999999999999999999999999999998

192 Reear&h ue#!$(:9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999994

198 Reear&h $"e!5e:999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999994

194 L!m!#a#!$( $% #he #udy99999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999

19 S&heme $% #he #udy999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999

Cha6#er /:L!#era#ure re5!e+:999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999

Cha6#er 2:Me#h$d$'$)y9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999918

291 Da#a e# a(d am6'e999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999918

29/ Sam6'!() #e&h(!,ue999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999918

292 ar!a"'e:9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999918

7


9/41

298 Reear&h Hy6$#he!:999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999991

294 De&r!6#!5e A(a'y!9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999991

29 ua(#!#a#!5e a(a'y!9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999991

Cha6#er 8: A(a'y!9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999991?

891 Da#a a(a'y! a(d D!&u!$(999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999991?

89/ De&r!6#!5e A(a'y!9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999991?

892 Pear$(> C$rre'a#!$( C$e%%!&!e(# A(a'y!99999999999999999999999999999999999999999999999999999999999999999999999999999999/0

898 Re)re!$( a(a'y!99999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999/1

491 Re&$mme(da#!$(99999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999/4

Re%ere(&e9999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999999/

8


10/41

List of Tables

Ta"'e 1:

De&r!6#!5e #a#!#!& JJJJJJJJJJJJJJJJJJJJJJJJ991

Ta"'e /:

C$rre'a#!$(JJJJJJJJJJJJJJJJJJJJJJJJJJJJ9/

Ta"'e 2:

Pa(e' OLS Re)re!$( %$r NOPJJJJJJJJJJJJJJJJJJJ99920

Ta"'e 8:

Pa(e' OLS Re)re!$( %$r ROAJJJJJJJJJJJJJJJJJJJ99921

9


11/41

Chapter 1: Introdction

W$r7!() &a6!#a' ! &r!#!&a' %$r #he &$m6a(y %!(a(&e a(d ! #$$ mu&h !m6$r#a(# %$r #he

$r)a(!=a#!$( #$ &$(#!(ue #he!r "u!(e %$r a '$() 6er!$d $% #!me9 W$r7!() &a6!#a' !

ued !( #he da!'y #ra(a!$( $% #he %!rm9 The +$r7!() &a6!#a' d!re'y dea' +!#h #he

&urre(# ae# a(d &urre(# '!a"!'!#!e +h!&h a%%e #he &$m6a(y> a"!'!#y $% "e!() '!,u!d

!( ae# a(d 6r$du!5!#y -Rehma( < Nar* /00.9

The #ud!e )rea#'y em6ha!=e $( #he &urre(# ae# ma(a)eme(# a &$m6ared #$ #he

%!ed ae# ma(a)eme(# "e&aue a %!(a(&!a' ma(a)er ! re6$(!"'e %$r #he ma(a)eme(#

$% &urre(# ae# a(d &urre(# ae# are #he '!%e "'$$d $% #he "u!(e9 The &urre(# ae#

e(&$m6a &ah* re&e!5a"'e* !(5e(#$r!e a(d e&ur!#!e +h!&h &a( "e ea!'y #ur(ed !(#$

&ah a(d&urre(# '!a"!'!#!e e(&!r&'e a&&$u(# 6aya"'e #hee h$u'd "e 6a!d +!#h!( $(e

year9 S$ "e!() a ma(a)er $% a(y &$m6a(y* +$r7!() &a6!#a' h$u'd "e u#!'!=ed !( u&h a

ma((er #ha# ! ($# !( #$$ mu&h e&e "e&aue !# +!'' &rea#e 6r$"'em u&h a #he

e&e %u(d +!'' ($# "e u#!'!=ed $r !(5e#ed #$ )e# m$re re#ur(9The ma!( a!m ! #$ )e#

m$re re#ur( a(d #$$ mu&h '$+ +$r7!() &a6!#a' +!'' a'$ &rea#e 6r$"'em "e&aue !# may

'ead #$ "a(7ru6#&y a(d !($'5e(&y -E'e''y* /008.9

The ma!( a!m $% #he %!rm ! #$ !(&reae #he hareh$'der +ea'#h a(d 6er%$rma(&e $% #he

%!rm9 I% #he ma(a)erd$ ($# &are a"$u# #he 6r$%!#* #he(#he "u!(e +!'' ($# #ay %$r '$()

!( #he mar7e#9 S!m!'ar'y* !%ma(a)er d$ ($# &are a"$u# #he '!,u!d!#y $% #he %!rm* !# +!''

'ead #$ #he 6r$"'em $% !($'5e(&y !( u&h a !#ua#!$( ma(y &$m6a(!e +!'' &'$e #he!r

"u!(e9 There are ma(y ur5ey &$(dued #ha# #he ma(a)er 6e(d #he!r ma$r #!me

$( #he 6r$"'em $% +$r7!() &a6!#a'9 The rea$( ! #ha# &urre(# ae# are em6'$yed !(

1


12/41

!(5e#me(# %$r a '!m!#ed 6a( $% #!me a(d !# )e# ,u!&7'y &$(5er#ed !(#$ $#her %$rm $%

ae#9 S$ #he "u!(e ha #$ 7ee6 #he +$r7!() &a6!#a' "a'a(&ed9

1.1 !ackgrond of the stdy:

I( $rder #$ !(&reae #he &$m6a(y 5a'ue* ma(a)er ha5e #$ 7ee6a6r!me 'e5e' $% +$r7!()

&a6!#a'9 By e6a(d!() ,ua(#!#y $% 6r$du* #he re5e(ue $% %!rm %r$m a'e +!''!(&reae

a(d a'$ #he ma(a)er ha5e #$ 7ee6 #he re&e!5a"'e 6er!$d h$r#* $#her+!e !# +!'' ($# "e

)$$d %$r #he &$m6a(y9 A($#her &$m6$(e(# ! #he a&&$u(# 6aya"'e: Ma(a)er ha5e #$

e#e(d #he 6aya"'e 6er!$d %$r #he 6ur6$e #$ ue #he ae# $r &ah %$r #he "e##erme(# $%

#he &$m6a(y9 Bu# #he 'a#e 6ayme(# ha5e !(5ere e%%e a'$ "e&aue 'a#e 6ayme(# !

&$#'y9 I% #he u66'!er $%%er a d!&$u(# %$r #h$e +h$ 6ay ear'y* #he "u!(e +!'' '$e

#ha# $66$r#u(!#y9

S$ h$+ &a( #he "u!(e* ma(a)e !# &urre(# ae# Su&h a &ah* $ #he "u!(e ha #$

ue #ha# &ah !( a "e##er +ay #$ )e(era#e ma!mum re#ur( %$r #he &$m6a(y9 I% #he

"u!(e ha ur6'u &ah* #he( #ha# &ah +!'' "e !(5e#ed !( $#her 6'a&e* "u!(e $r

mar7e#a"'e e&ur!#!e )e(era#e 6r$%!# %$r #he %!rm !(#ead $% 7ee6!() #he &ah ue'e9

Be!() a %!(a(&!a' ma(a)er #he ma(a)er ha5e #$ ma(a)e #he a&&$u(# re&e!5a"'e !( a

"e# +ay mea( #$ redu&e #he #!me 6er!$d $% &$''e!$(9 The "u!(e &a( &$''e #he!r

re&e!5a"'e "e%$re #!me "y $%%er!() &ah d!&$u(#9 Be&aue #he a)ed a&&$u(#

re&e!5a"'e are ($# )$$d %$r #he %!rm +h!&h &$u'd 'ead #$ #he 6r$"'em $% "ad de"#9

I(5e(#$ry ! a'$ a( !(d!6e(a"'e 6ar# $% +$r7!() &a6!#a' a(d deemed a a &urre(# ae#

a(d ma(a)er ha #$ ue !# !( u&h a +ay #$ !(&reae #he &$m6a(y 6er%$rma(&e9 Thu a

ma(a)er ha #$ )$ %$r -IT. u# !( #!me mea( +he( "u!(e re&e!5e$rder %r$m #he

&u#$mer #he( #he "u!(e ha5e #$ 6ur&hae #he ra+ ma#er!a' e#&9 %$r #he 6r$du!$(*

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h$+e5er #h! ! ma!('y %$r hu)e $rder9 The a&&$u(# 6aya"'e ! a( !m6$r#a(# &$m6$(e(#

#$ "e #rea#ed !( a "e# +ay %$r #he &$m6a(y> 6er%$rma(&e9 The "u!(e ha #$ !(&reae

#he 6er!$d $% 6ayme(# #$ #he u66'!er !( $rder #$ 7ee6 #he &ah !( #he "u!(e %$r $#her

6ur6$e9 Bu# #he 'a#e 6ayme(# ha5e dra+"a&7 a'$ "e&aue 'a#er $( #he 6ayme(#

+!'' "e !(%'a#ed %$r #he &$m6a(y9O!!$ma -1. #ree #ha# d!'!)e(# +$r7!() &a6!#a'

ma(a)eme(# #e'' a )$$d re'a#!$(h!6 am$() 5ar!$u d!5!!$( $% +$r7!() &a6!#a' $% a(

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a'e $% %!(!hed )$$d -De'$$%* /002.9 A 'ar)er &$(5er!$( &y&'e &a( !(&reae

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-CCC. a'$ de&reae #he &$m6a(y>6r$du!5!#y "y e&e am$u(# $% !(5e(#$r!e a(d

'$()er a&&$u(# re&e!5a"'e &y&'e !(&reae #he CCC* +h!&h e5e(#ua''y de&reae #he

6r$%!#a"!'!#y $% #he &$m6a(y9 T$ ue #he +$r7!() &a6!#a' e%%!&!e(#'y* "u!(e ha5e #$

6eed u6 #he &ah &$''e!$( a(d '$+ d$+( #he &ah d!"ureme(# $% #he &$m6a(y9 A

a reu'# #h$e &$m6a(!e +h!&h &$''e #he!r re&e!5a"'e ,u!&7'y a(d ha5e h$r#er &ah

&$(5er!$( &y&'e -CCC. +!'' ha5e 6$!#!5e !m6a $( #he 6r$%!#a"!'!#y9

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14/41

1." #ood and $ersonal Care $rodct %ector &$akistan':

There are /1 &$m6a(!e $% %$$d a(d 6er$(a' &are 6r$du re)!#ered+!#h KSE9

Pa7!#a( ! #he 2rd'ar)e# 6r$du&er $% m!'7 !( #he +$r'd9 Th! e$r &$(#r!"u#e +e'' !(

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! $(e $% #he #$6 %a# m$5!() &$(umer )$$d &$m6a(!e -FMCG. +!#ha mar7e#

&a6!#a'!=a#!$( $% R2? "!''!$(9 The a'e $% #he &$m6a(y ha !(&reaed %r$m R28

"!''!$( !( /00? #$ R? "!''!$( !( /0129 The ear(!() ! a'$ !(&reaed %r$m R19 "!''!$(

#$ R "!''!$(9

I( /012* $u# $% 40 %$$d ma(u%aur!() &$m6a(!e 2/ &$m6a(!e ear( 6r$%!#9 The e&$(d

'ar)e# %$$d &$m6a(y ! Ra%ha( Ma!=e '!m!#ed9 I# a'e !(&reaed %r$m R11 "!''!$( !(

/00? #$ R/8 "!''!$( !( /012 a(d !# ear(!() a'$ !(&reaed %r$m 194 "!''!$( #$ 2 "!''!$(

!( 'a# %!5e year9 The U(!'e5er ! #he $#her ma$r &$m6a(y !( #he %$$d a(d 6er$(a'

&are e$r9 A&&$rd!() #$ #he U(!'e5er !(%$rma#!$(* #e6 are #a7e( #$ !(&reae a'e !(

rura' area u&h a "u##er* $a6* ham6$$* #ea a(d )hee e#&9 #h! d!#r!"u#!$( $% !#em

ma7e #he a'e a(d 6r$%!# $% U(!'e5er d$u"'ed9 Sa'e %r$m R21 "!''!$( !( /00? #$ R1

"!''!$( !( /012 a(d 6r$%!# %r$m R/ "!''!$( #$ R "!''!$(9 There are ma(y $#her

&$m6a(!e +h!&h &$(#r!"u#e #$ #he &$u(#ry> e&$($my9

N$$( Pa7!#a( L!m!#ed #ar# !# $6era#!$( !( 1 a a 6u"'!& &$m6a(y9 Curre(#'y

29/ m!''!$( hare are he'd "y #he 6u"'!&9 La# year #he a'e $% #he N$$( Pa7!#a(

L!m!#ed+e(# d$+( "y /191 6er&e(#* +h!&h ! R2?94 m!''!$( a &$m6ared #$ /012

+h!&h ! R1* 09/ m!''!$(9 Na#!$(a' %$$d '!m!#ed #ar# !# $6era#!$( !( 109 I# ! $(e

$% #he mu'#! &a#e)$ry %$$d 6r$du&!() &$m6a(!e9 The &$m6a(y 6r$du&e /40 d!%%ere(#

6r$du I( /01/ #he 6r$%!# !(&reaed "y /948 6er&e(# a &$m6ared #$ /0119 E()r$

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%$$d Pa7!#a( ! $(e $% #he 'ar)e# %$$d 6r$du&!() &$m6a(!e9 1/ m!''!$( 6e$6'e ue #he

E()r$ 6r$du e5ery day9 Be!() a 'ar)e# 6r$du&er #he (e# a'e $% #he &$m6a(y

!(&reaed %r$m R* 2024 #$ R* ?1??28 !( /0189

She=a( #ar#ed !# $6era#!$( !( 18 !( Pa7!#a(9 I# ! $(e $% #he 'ar)e# ma()$

6r$du&er !( Pa7!#a(9 She=a( head $%%!&e ! '$&a#ed !( Lah$re Pa7!#a(9 I#'a# year

6r$%!# !(&reaed %r$m R2* 4/?1284 #h$ua(d !( /012 #$ R8* //1?/ #h$ua(d !( /0189

EFOODS E()r$ F$$d '!m!#ed Pa7!#a(

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1.( )esearch *estions:

1: H$+ &a( +$r7!() &a6!#a' ma(a)eme(# e%%e 6r$%!#a"!'!#y

/: Wha# are #he d!%%ere(# &$m6$(e(# +h!&h a%%e #he 6r$%!#a"!'!#y

2: Wha# ! #he re'a#!$(h!6 $% ACP* APP* ITID a(d CCC +!#h #he 6r$%!#a"!'!#y $% #he

&$m6a(y

1.+ )esearch ,b-ectives:

1. T$ %!(d #he re'a#!$(h!6 "e#+ee( WCM a(d 6er%$rma(&e $% Pa7!#a(! %$$d a(d

6er$(a' &are 6r$du &$m6a(!e !( 6r$%!#9

5


16/41

/. T$ #udy #he e%%e $% 5ar!$u 5ar!a"'e $% WCM $( #he 6r$du!5!#y $% %!rm !(

6r$%!#9

2. T$ 7($+ a"$u# #he !(#erde6e(de(&e $% CCC a(d #he 6r$%!#a"!'!#y $% Pa7!#a(!

%$$d a(d 6er$(a' &are 6r$du &$m6a(!e9

1. Limitation of the %tdy:

Our reear&h #udy ! u# '!m!#ed #$ #he Pa7!#a(! %$$d a(d 6er$(a' &are 6r$du

&$m6a(!e re)!#ered +!#h KSE9 I# +!'' ($# &$5er $#her e$r9 A'' &$m6a(!e $% %$$d

e$r are ($# !(&'uded !( #he am6'e "e&aue da#a ! ($# a5a!'a"'e9

1./ %cheme of the %tdy:

The &heme $% #he #udy ! "e'$+ a%#er #he %!r# &ha6#er

Cha6#er N$9 0/3 '!#era#ure Re5!e+: I( #h! 6$r#!$(* #he y($6! $% 6a# #ud!e re'a#ed

#$ WCM ! re6$r#ed9

Cha6#er N$9 023 Me#h$d$'$)y: I( #h! here #he me#h$d$'$)y ued !( #h! #udy a(d #he

6r$&e $% da#a &$''e!$( ! 6ree(#ed9

Cha6#er N$9 083 Da#a a(a'y!: Th! e!$( &$(#a!( a(a'y! $% #he #udy9

Cha6#er N$9 083 C$(&'u!$( a(d Re&$mme(da#!$(: Th! 6ar# &$(#a!( #he e(d reu'#

a(d re&$mme(da#!$( +h!&h &$u'd "e ued a )u!de'!(e "y $#her !( %u#ure #ud!e9

6


17/41

Chapter ": Literatre )eview

There are ma(y #ud!e &$(dued u# #$ 7($+ #he e%%e $% WCM $( 6r$%!#a"!'!#y $%

&$m6a(!e9 The 6re5!$u #ud!e !(d!&a#e #ha# a !)(!%!&a(# re'a#!$(h!6e!# "e#+ee(

WCM a(d 6r$%!#a"!'!#y $% #he %!rm9 Ma(y 6re5!$u #ud!e h$+ (e)a#!5e &$rre'a#!$(

"@+ WCM a(d %!rm 6er%$rma(&e9

Cha##eree* -/01/. #ud!ed #he re'a#!$(h!6 $% WCM a(d #he +ay h$+ #he 6r$%!#a"!'!#y

!a%%eed9 The #udy h$+ #ha# 6r$6er ma(a)!() $% +$r7!() &a6!#a' ! !m6$r#a(#9 I%

"u!(ee are +!''!() #$ !(&reae '!,u!d!#y #hey +!'' ra!e #he!r 'e5e' $% +$r7!() &a6!#a'9

S$ !# +!'' "e )$$d %$r a &$m6a(y #$ ma!(#a!( #he 6r$%!#a"!'!#y a(d '!,u!d!#y "a'a(&e9 T$

meaure 5ar!$u &$m6$(e(# $% WCM* am6'e !=e $% 100 I(d!a( &$m6a(!e ! #a7e(

%$r #he 6er!$d $% #+$ year /0103/0119 Mu'#!6'e Re)re!$( a(d m$de' $% &$rre'a#!$(

are ued #$ e#!ma#e #h! reear&h9 The reu'# !m6'!e #ha# I(d!a( %!rm a(d #he WCM

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!(d!&a#e#he (e)a#!5e re'a#!$( "e#+ee( 6r$%!#a"!'!#y $% I(d!a( %!rm a(d !# '!,u!d!#y*"u#

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#he &$(&'u!$( ! #ha# #he +$r7!() &a6!#a' (eed #$ "e ma(a)ed 6r$6er'y* +h!&h may

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6ayme(#9

Pa(!)rah!* -/012. #ud!ed #he ma(a)eme(# $% !(5e(#$ry a(d !# !m6a $( WCM $%

&eme(# &$m6a(!e $% I(d!a9 The "a!& 6ur6$e $% #h! reear&h had #$ e#!ma#e #he

a$&!a#!$( "e#+ee( !(5e(#$r!e &$(5er!$( a(d &$m6a(!e> 6er%$rma(&e !( ear(!()

6r$%!#9 A am6'e $% #$6 4 I(d!a( &eme(# &$m6a(!e %$r #he 6er!$d $% 10 year %r$m

/0013/010 ! ued9 A re)re!$( m$de' ! ued #$ 7($+ #he !m6a $% !(5e(#$ry

7


18/41

&$(5er!$( 6er!$d $5er )r$ $6era#!() 6r$%!#9 The reu'# !(#er6re# #he !(5ere

a%%!'!a#!$( am$() !(5e(#$ry &$(5er!$( 6er!$d a(d %!rm 6r$%!#a"!'!#y9

E(,5!#* Graham a(d N!77!(e(* -/012. #ud!ed #he re&e(# e&$($m!& %!a&$ $% /003

/00? a(d !# %$&u $( 6$'!&!e re)ard!() +$r7!() &a6!#a'9 The #udy a'$ #e(d #$ %!(d

#he r$'e $% #he "u!(e &y&'e $( +$r7!() &a6!#a' 6r$%!#a"!'!#y9 A'' %!((!hed '!#ed

&$m6a(!e $% F!('a(d ha ued a a am6'e %$r #he 6er!$d $% 1? year9 The reu'# h$+

#ha# #he a!5e +$r7!() &a6!#a' ma(a)eme(# ma##er %$r #he "u!(e* #here%$re !# h$u'd

"e !(&'uded !( %!rm %!(a(&!a' 6'a((!()9

-De'$$%* /002. #ud!ed #he e%%e $% WCM $( #he%!rm> a"!'!#y #$ ear( 6r$%!#9 A&&$rd!()

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#he "u!(e !( a )$$d +ay9 The reear&her em6'$y #he re)re!$( a(d &$rre'a#!$(

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+!#h '$+ e6e(e re5e(ue &a( #a7e '$() #!me #$ &$m6e(a#e %$r #he!r due9

A"du' Rahema( +!#h M$hamed Nar -/00.&$(dued a reear&h +!#h a!m #$ 7($+ #he

!(%'ue(&e $% WCM $( 6r$%!#a"!'!#y $% Pa7!#a(! %!rm9 A am6'e $% 8 Pa7!#a(! '!#ed

%!rm ! #a7e(!( #he 6a( $% year %r$m 13/0089 S#udy #r!5e #$ 7($+ a"$u# #he

e%%e $% d!%%ere(# &$m6$(e(# $% WCM9 The re)re!$( a(d &$rre'a#!$( m$de' are

em6'$yed %$r e#!ma#!()9 The reu'# h$+ !(5ere re'a#!$("e#+ee( +$r7!() &a6!#a'

ma(a)eme(# a(d #he 5ar!a"'e 6r$%!#a"!'!#y9 Whe( CCC !(&reae #he 6r$%!#a"!'!#y +!''

"e de&reaed "u# #he ma(a)er ha5e #$ !(&reae #he hareh$'der> +ea'#h* $ ma(a)er

+!'' de&reae #he CCC #$ #he ma''e# 'e5e'9 The !=e a(d %!rm> 6r$%!#a"!'!#y 6$e a

8


19/41

6$!#!5e re'a#!$(* +h!'e!(!)(!%!&a(# re'a#!$(h!6 "e#+ee( %!rm> de"# a(d !#

6r$%!#a"!'!#y9

Sa%dar* -/01/.addreed #he e%%e $% WCM $( Pa7!#a( ma(u%aur!() %!rm>

6r$%!#a"!'!#y9 The reear&her $"#a!( 100 ma(u%aur!() %!rm a a am6'e %r$m KSE %$r

10 year 6er!$d* %r$m 13/00?9 SPSS ! ued %$r re)re!$( a(d &$rre'a#!$(9 The

reear&her &$(&'ude #ha# #here ! a (e)a#!5e !(#erde6e(de(&y "e#+ee( WPM>5ar!a"'e

a(d #he %!rm> a"!'!#y #$ ear( 6r$%!#9 I# !m6'!e #ha# a( !(&reae !( #he CCC* #he %!rm>

6r$%!#a"!'!#y +!'' de&reae a(d !# a'$ h$+ (e)a#!5e &$rre'a#!$( "@+ 6r$%!#a"!'!#y a(d

'!,u!d!#y9 The e#!ma#!$( a'$ h$+ a 5!!"'e!(#erde6e(de(&yam!d #he !=e $% #he %!rm

a(d 6r$%!#a"!'!#y9

Saya(a(* -/018. #e(ded #$ %!(d #ha# #he WCM a a a ma$r r$'e !( #he %!rm>

6r$%!#a"!'!#y a(d #he WCM &$(#r!"u#e 6$!#!5e'y #$ #he %!rm> 5a'ue9 Sam6'e !=e $% ?0

Sr! La(7a( %!rm +a #a7e( %r$m CSE !( #he 6a( $% e5e( year %r$m /OO23/OO9

Th! reear&h ! "aed $( #he e&$(dary da#a a(d SPSS ! ued9 The reu'# !(#er&e6#a(

!(5ere !(#erde6e(de(&y "e#+ee( de6e(de(# a(d a'' #he !(de6e(de(# 5ar!a"'e9 The

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!(5e(#$r!e #$ #he 'a# 'e5e'9

Umer a(d N$uhee(* -/010. !(5e#!)a#ed #he re'a#!$(h!6 "e#+ee( WCM a(d

6r$%!#a"!'!#y !( Pa7!#a(> #e#!'e e$r9 I( #he #udy 44 #e#!'e &$m6a(!e !(

Pa7!#a(ha5e "ee( em6'$yed a a am6'e %$r year %r$m /0023/00? a(d SPSS ! ued

#$ ru( &$rre'a#!$(* re)re!$( a(d ANOA #e#9 The reu'# h$+a 6$!#!5e re'a#!$(h!6

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&$# $% de"#9 I# mea( #ha# !(&rea!() de"# %!(a(&!() +!'' de&reae #he %!rm>

9


20/41

6r$%!#a"!'!#y9 The reu'# a'$ he'6 #he &$m6a(!e #$ ma(a)e +$r7!() &a6!#a' m$re

e%%!&!e(#'y9

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$% #he #udy ! #$ 7($+ #he !(%'ue(&e $% CCC $( 6r$%!#a"!'!#y $% #he %!rm9 A )r$u6 $%

1/? %!rm ! e'eed a a am6'e re)!#ered!( Bura Ma'ay!a %$r #he 6a( $% 10 year

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&$(5er!$( &y&'e* !(&reae !( #he CCC+!'' redu&e 6r$%!# $% #he %!rm9 S$ #he ma(a)er &a(

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ma(a)eme(# $% CCC a(d a'$ 7ee6!() #he 5ar!$u &$m6$(e(# u&h a re&e!5a"'e*

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Gar&!a a(d Ma#!(e=3S$'a($* -/00. #ud!ed #he re'a#!$(h!6 $% WCM a(d 6r$%!#a"!'!#y9

The a!m $% #he #udy +a #$ 7($+ #he e%%e $% WCM $( 6r$%!#a"!'!#y $% -SME.#$ ee

#he !(%'ue(&e $% #he CCC a(d !# &$m6$(e(#9 ??/ SME are #a7e( a a am6'e %$r #he

6er!$d $% year %r$m 1 #$ /00/ "y u!() 6a(e' da#a %$re#!ma#!$(9 The reu'#

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10


21/41

#ha# a ma(a)er &a( !(&reae #he SME !m6$r#a(&e "y dr$66!() #he !(5e(#$r!e a(d #he

(um"er $% day %$r +h!&h #he a&&$u(# are $u##a(d!()9 The 6r$%!#a"!'!#y $% SME a'$

!(&reae "y redu&!() #he CCC9

M$hama(d a(d Saad* -/010. #ud!ed #he re'a#!$(h!6 $% WCM a(d 6er%$rma(&e $%

Ma'ay!a( &$m6a(!e9 Se&$(dary da#a +ere ued a(d a am6'e $% 1/ Ma'ay!a(

&$m6a(!e ha "ee( #a7e( %r$m Bura Ma'ay!a %$r 4 year %r$m /0023/009 The

reear&h ! &$(dued #$ %!(d #he e%%e $% +$r7!() &a6!#a' &$m6$(e(# $( 6r$%!#a"!'!#y*

u&h a CCC* &urre(# ra#!$ -CR.* &urre(# ae# #$ #$#a' ae# ra#!$* &urre(# '!a"!'!#y #$

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#udy SPSS $%#+are ! ued %$r &$rre'a#!$( a(d mu'#!6'e re)re!$( a(a'y!9 The

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11


22/41

!(5e(#$ry #ur($5er a(d &urre(# ra#!$9 T$ mea(* med!a(* &$rre'a#!$( a(d re)re!$(

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12


23/41

The a!m $% #he #udy ! #$ %!(d #he !(%'ue(&e $% WCM $( 6r$%!#a"!'!#y $% #he &$m6a(!e9

F$r #h! 6ur6$e re)re!$( a(a'y! ! ued a(d a am6'e $% /44 &$m6a(!e #a7e%r$m

#he TSE%$r #hree year %r$m /003/009 The reu'# $% #h! #udy h$+ (e)a#!5e

&$rre'a#!$( "e#+ee( )r$ $6era#!() 6r$%!#* !(5e(#$ry &$(5er!$( 6er!$d a(d re&e!5a"'e

&$''e!$( 6er!$d9 Th! h$+ #ha# #he 5a'ue $% #he &$m6a(!e de&rea!() "y CCC*

!(5e(#$ry &$(5er!$( 6er!$d a(d re&e!5a"'e &$''e!$( 6er!$d9

G!''* B!)er a(d Ma#hur* -/010. !(5e#!)a#ed #he re'a#!$(h!6 "e#+ee( WCM a(d

6r$%!#a"!'!#y $% #he %!rm9 T$ #udy #he re'a#!$(h!6 $% Amer!&a( %!rm %$r #h! ?? %!rm

are #a7e( a a am6'e %r$m NYSE %$r 2 year %r$m /0043/009 T$ mea(* med!a(*

#a(dard de5!a#!$(* re)re!$( a(d &$rre'a#!$( SPSS ! ued9 The 6re5!$u #udy h$+a

(e)a#!5e re'a#!$(h!6 "e#+ee( CCC a(d )r$ $6era#!() 6r$%!#* "u# #he #udy $%

Amer!&a( %!rm h$+a 6$!#!5e re'a#!$(h!6 "e#+ee( CCC a(d )r$ $6era#!() 6r$%!#9

The #udy a'$ h$+ #ha# +he( #he &$''e!$( $% a&&$u(# re&e!5a"'e ! '$+ #he

6r$%!#a"!'!#y +!'' "e '$+9 The #udy a'$ h$+ #ha# ($ !)(!%!&a(# re'a#!$(h!6

e!#"e#+ee( )r$ $6era#!() 6r$%!# ra#!$ a(d %!rm !=e9

Thu5ara7(a* -/012. #he #udy +a &$(dued !( #he UK a(d #hey are a'$ !(#ere#ed #$

7($+ #he !m6a $% +$r7!() &a6!#a' ma(a)eme(# $( #he 6r$%!#a"!'!#y $% d!%%ere(#

!(du#r!e9 The &$re a!m $% #he #udy ! #$ %!(d $u# #he re'a#!$(h!6 $% d!%%ere(# +$r7!()

&a6!#a' &$m6$(e(# a(d 6r$%!#a"!'!#y9 !e CCC* re&e!5a"'e !( day* 6aya"'e !( day*

!(5e(#$ry day* de"# a(d !=e9 T$ 7($+ #he re'a#!$(h!6 a am6'e $% &$m6a(!e !

#a7e( 0 %r$m ma(u%aur!()* /0 %r$m &$(#ru!$( a(d 1 %r$m #e'e&$mmu(!&a#!$(9

Thee &$m6a(!e are#a7e( %r$m LSE %$r year %r$m /003/0119 The Pear$(>

&$rre'a#!$( a(d re)re!$(are ued !( #h! #udy9 The #udy &$(&'ude #ha# #here ! ($

!)(!%!&a(# re'a#!$(h!6 "e#+ee(#he +$r7!() &a6!#a' &$m6$(e(# a(d 6r$%!#a"!'!#y9

13


24/41

Chapter (: 0ethodology

(.1 Data set and %ample:

The reear&h ! &$(dued $( #he "a! $% e&$(dary da#a "e&aue !# ! d!%%!&u'# %$r a(

!(d!5!dua' #$ &$''e da#a %r$m d!%%ere(# !(du#r!e "e&aue $% d!%%ere(# rea$(9 The

da#a +ere &$''eed %r$m #he Kara&h! #$&7 e&ha()e9 There are /1 &$m6a(!e $% %$$d

a(d 6er$(a' &are 6r$du '!#ed $( #he KSE9 I( #h! reear&h am6'e $% ? &$m6a(!e

%r$m %$$d a(d 6er$(a' &are 6r$du ! e'eed due #$ ($(3a5a!'a"!'!#y $% da#a9 Th!

da#a ! &$''eed %r$m #he KSE a(d #he +e"!#e $% #he &$m6a(!e %$r #he 6er!$d $%

year %r$m /003/0189 The #a#!#!&a' #e&h(!,ue ha #$ "e a66'!ed #$ %$reee #he

re'a#!$(h!6am$() WCM a(d 6r$%!#a"!'!#y $% Pa7!#a(! %$$d a(d 6er$(a' 6r$du

&$m6a(!e9

(." %ampling Technie:

A #a#!#!&a' #e&h(!,ue #ha# ! ued !( #he #udy ! #he ra(d$m am6'!() #e&h(!,ue9

(.( 2ariables:

The 5ar!a"'e are &h$e( "y #udy!() 6re5!$u reear&he $( WCM9

F$''$+!() are #he '!# $% de6e(de(# a(d !(de6e(de(# 5ar!a"'e9

Ne# $6era#!() 6r$%!#a"!'!#y -NOP. +a uedde6e(de(# 5ar!a"'e a(d a'$#$ )au)e #he

6er%$rma(&e $% #he &$m6a(!e9

A5era)e &$''e!$( 6er!$d -ACP.* !(5e(#$ry #ur($5er !( day -ITID.* a5era)e 6ayme(#

6er!$d -APP.* a(d #he &ah &$(5er!$( &y&'e -CCC. are ued a a 6r$y a(d

!(de6e(de(# 5ar!a"'e99

14


25/41

3et operating profit:

Ne# $6era#!() 6r$%!# ! de%!(ed a $6era#!() !(&$me add de6re&!a#!$( a(d $5er #$#a'

ae# u"#ra!()a %!(a(&!a' ae#9

NOP O6era#!() 6r$%!# de6re&!a#!$(@#$#a' ae# %!(a(&!a' ae#

Average collection period &AC$':

Whe( re&e!5a"'e are d!5!ded "y a'e a(d mu'#!6'y "y #he (um"er $% day !( year 249

I# +!'' )!5e a( a5era)e &$''e!$( 6er!$d9

ACP a&&$u(# re&e!5a"'e 4 a'e24

Inventory trnover in days &ITID':

I# ! &a'&u'a#ed +he( !(5e(#$ry ! d!5!ded "y #he &$# $% )$$d $'d a(d mu'#!6'y

+!#h#he (um"er $% day !( a year9

ITID !(5e(#$ry 4CGS 24

Average payment period &A$$':

Whe( a&&$u(# 6aya"'e are d!5!ded "y 6ur&hae a(d mu'#!6'y "y #he (um"er $% day

!( $(e year* #he( !# reu'# !(#he a5era)e &$''e!$( 6er!$d9

APP a&&$u(# 6aya"'e 46ur&hae 24

Cash conversion cycle &CCC':

By add!() a5era)e &$''e!$( 6er!$d +!#h !(5e(#$ry #ur($5er !( day a(d u"#ra!()

a5era)e6ayme(# 6er!$d )e# &ah &$(5er!$( &y&'e a a reu'#9

15


26/41

CCC a5era)e &$''e!$( 6er!$d !(5e(#$ry #ur($5er !( day 5 a5era)e 6ayme(#

6er!$d

(.+ )esearch 6ypothesis:

The ma!( de#erm!(a(# $% #he #udy +a #$ 7($+ a"$u# #he re'a#!$(h!6 $% 6r$%!#a"!'!#y

a(d WCM* %$r #h! #he %$''$+!() hy6$#hee are #$ "e ued9 There +!'' "e Nu''

Hy6$#he! QH$ 5ere a'#er(a#!5e Hy6$#he! QH19

Hy6$#he! 1

H$1: There ! a !)(!%!&a(# +ay $% WCM $( #he 6r$%!#a"!'!#y $% Pa7!#a(! %$$d a(d

6er$(a' &are 6r$du &$m6a(!e9

H11: There ! ($ 5!!"'e e%%e $% WCM $( #he 6r$%!#a"!'!#y $% Pa7!#a(! %$$d a(d


Hy6$#he! /

H$ /: There ! a (e)a#!5e re'a#!$(h!6 $% &$m6$(e(# $% WCM $( 6r$%!#a"!'!#y $%

Pa7!#a(! %$$d &$m6a(!e9

H1/: There ! a 6$!#!5e re'a#!$(h!6 $% &$m6$(e(# $% WCM $( 6r$%!#a"!'!#y $%

Pa7!#a(! %$$d &$m6a(!e9

Hy6$#he! 2

H$2: There ! a (e)a#!5e&$rre'a#!$( $% CCC +!#h #he 6r$%!#a"!'!#y $% #he &$m6a(!e9

H12: There ! a 6$!#!5e&$rre'a#!$($% CCC +!#h #he 6r$%!#a"!'!#y $% Pa7!#a(! %$$d a(d


16


27/41

(. Descriptive Analysis:

De&r!6#!5e a(a'y! ! #$ "e ued !( #h! #udy9 I( de&r!6#!5e a(a'y!* SPSS $%#+are !

ued !( $rder #$ 7($+ a"$u# a5era)e* #a(dard de5!a#!$(* m!(!mum a(d ma!mum

5a'ue $% d!%%ere(# &$m6$(e(#9 The m!(!mum a(d ma!mum 5a'ue &a( "e em6'$yed

!( $rder #$ 7($+ #he d!%%ere(&e "e#+ee( #he 5ar!a"'e !( $rder #$ )e# m$re !(%$rma#!$(9

(./ *antitative Analysis:

I( ua(#!#a#!5e a(a'y! C$rre'a#!$( a(d Re)re!$( m$de' are ued9F!r# Pear$(

&$rre'a#!$( ! ued a(d #he( Re)re!$( !( $rder #$ 7($+ #he re'a#!$(h!6 $% #he 5ar!a"'e

+!#h #he 6r$%!#a"!'!#y9 The me#h$d #ha# ! ued%$r a(a'y! ! #he P$$'ed $rd!(ary 'ea#

,uare a(d 6a(e' da#a ! !( #he P$$'ed re)re!$(9 F$r #h! a(a'y!* SPSS a(d E35!e+

$%#+are ! ued9

17


28/41

Chapter +: Analysis

+.1 Data Analysis and Discssion:

Th! #udy ha #$ 6ree(# / #y6e $% a(a'y! $(e ! de&r!6#!5e a(d $#her ! ,ua(#!#a#!5e9

Thee #+$ #y6e> a(a'ye +!'' "e d!&ued "e'$+9

+." Descriptive Analysis:

Here #h! a(a'y! $% #he $()$!() #udyd!6'ay #he mea( a(d #a(dard de5!a#!$( $%

d!%%ere(# &$m6$(e(#9 De&r!6#!5e #udy a'$ h$+ #he ma!mum a(d m!(!mum 5a'ue

$% #he &$m6$(e(# +h!&h !(d!&a#e #ha# h$+ &a( #he 5ar!a"'e a&h!e5e !# ma!mum a(d

m!(!mum 5a'ue9

The "e'$+ #a"'e re6ree(# a #rue 6!ure $% de&r!6#!5e #a#!#!& $% e!)h# ($(3%!(a(&!a'

%!rm $% %$$d a(d 6er$(a' &are 6r$du e$r $% Pa7!#a( %$r #he 6er!$d $% year

%r$m /003/0189 The de&r!6#!5e #a#!#!& $% #he reear&h 6ree(# #he mea( 5a'ue $%

re#ur( $( ae# 10948 a(d #a(dard de5!a#!$( 10919 I# a'$ re6ree(# #ha# #he %!rm

6r$%!#a"!'!#y &a( m$5e #$ "$#h !de "y 10919 I# a'$ h$+ #ha# %$r a %!rm !( a year

#he ma!mum 5a'ue $% re#ur( $( ae# ! /91 a(d #he m!(!mum 5a'ue ! 3109019

18


29/41

Table 1: Descriptive %tatistics

N M!(!mum Ma!mum Mea( S#d9 De5!a#!$(

ROA

8? 310901 /91 109488 1091?4/

ACP 8? 980 49 18912 1298?10

ITID 8? 1/900 1?9 ?198012 8/94418/

APP 8? 14922 /12900 19?4/ 8298/??

CCC 8? 31/900 12?94 2291?2 89210

a'!d N -'!#+!e. 8?

The da#a h$+ #ha# #he e#reme #!me #a7e( "y #he %!rm #$ aem"'e !# re&e!5a"'e ! 4?

day a(d #he 'ea# #!me %$r #he &$''e!$( ! 1 day9 The %!rm #a7e ?1 day $( a5era)e #$

e'' #he !(5e(#$ry +!#h #he #a(dard de5!a#!$( $% 82 day9 The m!(!mum #!me #a7e( "y

#he %!rm #$ e&ha()e !# !(5e(#$ry !(#$ a a'e ! 1/ day +h!'e #he ma!mum 6er!$d !

1 day9 The &$m6a(!e 6ay !# 6ayme(# $( a5era)e $% / day +!#ha #a(dard

de5!a#!$( $% 82 day9 The 'ea# #!me #a7e( "y #he %!rm #$ 6ay #he u66'!er ! 14 day

a(du6reme day %$r #he 6ayme(# are /12 day9 I( #he #udy CCC ! ued a a 6r$y %$r

#$ 7($+ #he 6r$%!&!e(&y $% +$r7!() &a6!#a' &a( #a7e a($rma' $% 28 day a(d +!#ha

#a(dard de5!a#!$( $% 8 day9

+.( $earson7s Correlation Coefficient Analysis:

I( #he reear&h #he Pear$(> &$rre'a#!$( ! em6'$yed %$r #he 6ur6$e #$ 7($+ #he

re'a#!$(h!6 $% WCM a(d#he %!rm> a"!'!#y $% "e!() 6r$%!#a"'e9 I% #he +$r7!() &a6!#a' !

ma(a)ed e%%!&!e(#'y* #he 6r$%!#a"!'!#y $% #he %!rm +!'' !(&reae9 Whe( #he #!me 6er!$d

"e#+ee( #he 6r$&ureme(# $% ra+3ma#er!a' a(d #he aem"'y $% re&e!5a"'e ! 'e()#hy

19


30/41

#he 6r$%!#a"!'!#y +!'' "e de&reaed "u# !% #h! #!me 6er!$d ! h$r#* #he 6r$%!#a"!'!#y $% #he

%!rm +!'' !(&reae9

The a(a'y! $% &$rre'a#!$( reu'# ha #$ "e #ar#ed %r$m #he a5era)e &$''e!$( 6er!$d

a(d (e# $6era#!() 6r$%!#9 The $u#&$me $% &$rre'a#!$( h$+ #ha# a5era)e &$''e!$(

6er!$d ha a (e)a#!5e &$e%%!&!e(# 309/? a(d a 635a'ue ! -09080. +h!&h ! 5ery

!)(!%!&a(# a# 49 S$ %r$m #h! reu'#* !# ! &$(&'uded #ha# +he( #he a5era)e

&$''e!$( 6er!$d ! !(&reaed* !# +!'' a%%e #he 6r$%!#a"!'!#y !(5ere'y mea( #ha# #he

6r$%!#a"!'!#y +!'' de&reae9 Whe( #he ACP ! de&reaed #he 6r$%!#a"!'!#y +!'' !(&reae9

The reu'# $% &$rre'a#!$( +!#h #he !(5e(#$ry #ur($5er !( day h$+ #ha# #he !(5e(#$ry

#ur($5er ha (e)a#!5e &$e%%!&!e(# 3098/2 a(d 635a'ue ! -090002. +h!&h h$+ #ha# #he

reu'# ! e#reme'y !)(!%!&a(# a# 4 $(&e a)a!(9 Th! reu'# h$+ #ha# !% #he #!me

6er!$d $% &$(5er!$( !(5e(#$ry !(#$ a a'e ! '$() #he 6r$%!#a"!'!#y $% #he %!rm +!'' "e

'$+ a(d !% #h! #!me 6er!$d ! h$r# #he 6r$%!#a"!'!#y $% #he %!rm +!'' "e h!)her9 The reu'#

$% &$rre'a#!$( +!#h a5era)e 6ayme(# 6er!$d ! ame9 The APPha a (e)a#!5e &$e%%!&!e(#

$% 309// +!#h a 635a'ue $% 0901 +h!&h ! h!)h'y !)(!%!&a(# a# 49 I#!(d!&a#e #ha#

ma'' 6r$%!#a"'e &$m6a(!e &a( +a!# %$r a '$() #!me #$ 6ay #he due 6ayme(#9 The reu'#

$% &$rre'a#!$( $% #he &ah &$(5er!$( &y&'e ! ame #$ #ha# $% $#her 5ar!a"'e9 The CCC*

+h!&h meaure WCM haa (e)a#!5e &$e%%!&!e(# $% 090/4 +!#h 635a'ue 0908 +h!&h

!(d!&a#e #ha# !# ! !)(!%!&a(# a# 49 Fr$m #h! !# ! &$(&'uded #ha# !% #he &ah

&$(5er!$( &y&'e ! h!)h #he %!rm 6r$%!#a"!'!#y ha "e '$+9 A(d +he( #he CCC !

de&reaed* #he &$m6a(y 6r$%!#a"!'!#y +!'' !(&reae9

The &$rre'a#!$( a(a'y! $% #he re#ur( $( ae# ! ame #$ #ha# $% #he reu'# $% (e#

$6era#!() 6r$%!#* "u# #he $('y &$e%%!&!e(# a(d 635a'ue are &ha()ed9 A(d !# ! ($# a mu&h

!)(!%!&a(# #$ #ha# $% (e# $6era#!() 6r$%!#9 I( $me &ae* #he &$rre'a#!$( a'$ h$+

6$!#!5e !)(!%!&a(&e +!#h a5era)e &$''e!$( 6er!$d a(d CCC* +h!&h ! 0900 +!#h 63

20


31/41

5a'ue 090?9 Thee 6e&!%y #ha# !% %!rm #a7e e#ra6aue #$ &$''e !# re&e!5a"'e* #h!

+!'' !(&reae !# CCC9

Fr$m #h! a(a'y!* !# ! %$u(d #ha# !%#he %!rm ha #he a"!'!#y #$ &u# !# #!me 6er!$d* #he(

#he %!rm ! m$re &$m6e#e(# !( ha(d'!() +$r7!() &a6!#a'9 A(d #he 6r$%!&!e(&y $% #he %!rm

ha!(&reaed #he 6r$%!#a"!'!#y9

+.+ )egression Analysis:

I( reear&h #he re)re!$( ! ued %$r #he !(#e(#!$( #$ 7($+ #he !m6a $% WCM $(

6r$%!#a"!'!#y $% #he %!rm9 The da#a -6$$'ed. re)re!$( ! ued "e&aue !# ! )$$d #$ ue

!( #udy!() #he u(der'y!() %$r&e $% adu#me(# a(d #he 6a(e' da#a 6r$5!de "e##er

reu'# #$ !de(#!%y a(d meaure #he e%%e %r$m #ha# $% #he 6ure &r$3e!$( a(d #!me

er!e da#a9

+. )egression 0odel: $ooled ,rdinary Least %ares 8stimation:

I( reear&h #he #+$ de6e(de(# 5ar!a"'e are ued #ha# are (e# $6era#!() 6r$%!# a(d re#ur(

$( ae#9 The 6$$'ed 6a(e' da#a ! ued a $% 8? %!rm year $"er5a#!$(9 I( #he reear&h

a (um"er re)re!$( &$e%%!&!e(# are ued %$r #he !(de6e(de(# 5ar!a"'e9

The m$de' ued here %$r #he 6$$'ed 'ea# ,uare me#h$d ! )!5e( "e'$+9

NOP I t 0 1-ACP ! #. / -ITID I #. 2 -APP I #. 8 -CCC I #. V

The reu'# $% #he re)re!$( m$de' #ha# are ued here h$+ #ha# #he &$e%%!&!e(# $%

a5era)e a&&$u(# re&e!5a"'e ! 494 +h!&h ! h!)h'y !)(!%!&a(# a# 9 49 The reu'#

!(d!&a#e #ha# !% #he a&&$u(# re&e!5a"'e ha !(&reaed $r de&reae !# +!'' h$+ a !)(!%!&a(#

e%%e $( #he 6r$%!#a"!'!#y $% #he &$m6a(y9 The reu'# $% ITID +h!&h ! ued !( #he #udy a

a( !(de6e(de(# 5ar!a"'e #ha# h$+ #he&$e%%!&!e(# $% !(5e(#$ry #ur($5er rema!( /928

+h!&h ! e#reme'y !)(!%!&a(# 0900009 Th! reu'# $% !(5e(#$ry #ur($5er h$+ #ha# !% #he

21


32/41

!(&reae $r de&reae $&&urred !( #he ITID !# +!'' ha5ea !)(!%!&a(# e%%e $( #he

6er%$rma(&e $% #he %!rm9

The #h!rd 5ar!a"'e +h!&h ! a5era)e 6ayme(# 6er!$d! ued a a( !(de6e(de(# 5ar!a"'e9 S$

%!(d!() $% #he #udy h$+ #ha# #he &$e%%!&!e(# $% a5era)e 6ayme(# ! 3189? +h!&h !

(e)a#!5e a(d ! h!)h'y !)(!%!&a(# 09011/9 I# d!re #ha# !% #he !(&reae $r de&reae

$&&urred !(#he 6ayme(# 6er!$d*!# +!'' ha5e a !)(!%!&a(# e%%e $( #he 6r$%!#a"!'!#y $% #he

%!rm9The &ah &$(5er!$( &y&'e ! a'$ ued a a( !(de6e(de(# 5ar!a"'e9 The CCC !

&a'&u'a#ed "y add!() ACP a(d ITID a(d "y u"#ra!() #he a5era)e 6ayme(# 6er!$d9

The &ah &$(5er!$( &y&'e ! ma!('y ued %$r #he 6ur6$e #$ &he&7 #he 6r$%!&!e(&y $%

WCM9 The reu'# e6ree #he &$e%%!&!e(# $% #he &ah &$(5er!$( &y&'e* (e)a#!5e

+h!&h ! e,ua' #$ 309181/ a(d ! h!)h'y !)(!%!&a(# 0900019 Th! reu'# !(d!&a#e #ha#

!% #he CCC ! !(&reae $r de&reae !# +!'' a%%e #he 6r$%!#a"!'!#y $% #he %!rm !)(!%!&a(#'y9

The e&$(d de6e(de(# 5ar!a"'e ! ued #ha# ! ROA -re#ur( $( ae#. ! a'$ d!&ued

"e'$+*

ROA it 0 1 -ACP !#. / -ITID !#. 2 -APP !#. 8 -CCC !#. V

The re#ur( $( ae# ! #he e&$(d de6e(de(# 5ar!a"'e +!#h #he %$ur !(de6e(de(#

5ar!a"'e9 Su&h a a5era)e &$''e!$( 6er!$d* !(5e(#$ry #ur($5er !( day* a5era)e

6ayme(# 6er!$d a(d &ah &$(5er!$( &y&'e9 The reu'# $% #he #udy ! ame #$ #ha# $% (e#

$6era#!() 6r$%!#* "u# $('y #he 5a'ue &$e%%!&!e(# a(d &$(%!de(&e !(#er5a' ! &ha()ed9 S$

#he &$e%%!&!e(# $% a5era)e &$''e!$( 6er!$d ! e,ua' #$ ?904 a(d ! h!)h'y !)(!%!&a(#

090049 F$r #he !(5e(#$ry #ur($5er !( day #he &$e%%!&!e(# ! 8?90 a(d ! h!)h'y

!)(!%!&a(# 0900009 The #udy h$+ #ha# #he &$e%%!&!e(# $% APP ! (e)a#!5e* +h!&h !

38092 a(d e#reme'y !)(!%!&a(# 0900019 The %$ur#h ! &ah &$(5er!$( &y&'e !#

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)eferences

1. Rahema(* A9* < Nar* M9 -/00.9 W$r7!() &a6!#a' ma(a)eme(# a(d

6r$%!#a"!'!#y&ae $% Pa7!#a(! %!rm9International review of business research

papers* 3-1.* /32009

/. A%=a* T9* < Na=!r* M9 S9 -/00?.9 W$r7!() &a6!#a' a66r$a&he a(d %!rm> re#ur(

!( Pa7!#a(9Pakistan Journal of Coerce an! "ocial "ciences*1-1.* /4329

25


36/41

2. Na6$m6e&h* K9 -/01/.9 E%%e $% +$r7!() &a6!#a' ma(a)eme(# $( #he

6r$%!#a"!'!#y $% Tha! '!#ed %!rm9International Journal of #ra!e$ %conoics an!

&inance* 3-2.* //3/2/9

8. Rahema(* A9* A%=a* T9* ayyum* A9* < B$d'a* M9 A9 -/010.9 W$r7!() &a6!#a'

ma(a)eme(# a(d &$r6$ra#e 6er%$rma(&e $% ma(u%aur!() e$r !(

Pa7!#a(9International Research Journal of &inance an! %conoics* '(-1.*

14319

4. A)ha* H9 -/018.9 Im6a $% W$r7!() Ca6!#a' Ma(a)eme(# $(

Pr$%!#a"!'!#y9%uropean "cientific Journal* 10-1.9

. M$hamad* N9 E9 A9 B9* < Saad* N9 B9 M9 -/010.9 W$r7!() &a6!#a' ma(a)eme(#:

The e%%e $% mar7e# 5a'ua#!$( a(d 6r$%!#a"!'!#y !( Ma'ay!a9International

Journal of )usiness an! *ana+eent* ,-11.* 61809

. ar!ya+a#!* M9 A9* A((uar* M9 N9* Tau%!,* H9* < A"du' Rah!m* A9 S9 -/00.9

W$r7!() &a6!#a' ma(a)eme(# a(d &$r6$ra#e 6er%$rma(&e: Cae $%

Ma'ay!a9Journal of *o!ern Accountin+ an! Au!itin+* ,-11.* 83489

?. ua( Gar&a3Terue'* P9* < Mar#!(e=3S$'a($* P9 -/00.9 E%%e $% +$r7!() &a6!#a'

ma(a)eme(# $( SME 6r$%!#a"!'!#y9International Journal of ana+erial

finance* 3-/.* 18319

. Ga(ea(* 9 -/00.9 A( a(a'y! $% +$r7!() &a6!#a' ma(a)eme(# e%%!&!e(&y !(

#e'e&$mmu(!&a#!$( e,u!6me(# !(du#ry9Rivier aca!eic -ournal* 3-/.* 13109

10. Pada&h!* K9 -/00.9 Tre(d !( +$r7!() &a6!#a' ma(a)eme(# a(d !# !m6a $(

%!rm> 6er%$rma(&e: a( a(a'y! $% Maur!#!a( ma'' ma(u%aur!()

%!rm9International Review of business research papers* .-/.* 8434?9

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11. Chha6ra* I9 U9* < Na,5!* N9 A9 -/010.9 Re'a#!$(h!6 "e#+ee( e%%!&!e(&y 'e5e' $%

+$r7!() &a6!#a' ma(a)eme(# a(d 6r$%!#a"!'!#y $% %!rm !( #he #e#!'e e$r $%

Pa7!#a(9

1/. Na=!r* M9 S9* < A%=a* T9 -/00.9 Im6a $% a))re!5e +$r7!() &a6!#a'

ma(a)eme(# 6$'!&y $( %!rm> 6r$%!#a"!'!#y9 #he I/P -ournal of applie!

finance*1,-?.* 13209

12. La=ar!d!* I9* < Try%$(!d!* D9 -/00.9 Re'a#!$(h!6 "e#+ee( +$r7!() &a6!#a'

ma(a)eme(# a(d 6r$%!#a"!'!#y $% '!#ed &$m6a(!e !( #he A#he( #$&7

e&ha()e9Journal of financial ana+eent an! analsis* 1-1.9

18. u"a!r!* H9 9 -/011* u'y.9 Im6a $% +$r7!() &a6!#a' ma(a)eme(# a(d &a6!#a'

#ruure $( 6r$%!#a"!'!#y $% au#$m$"!'e %!rm !( Pa7!#a(9 I(&inance an!

Corporate 2overnance Conference9

14. S!a'* M9 S9* < Chaudhry* A9 -/01/.9 Re'a#!$(h!6 "e#+ee( W$r7!() Ca6!#a'

Ma(a)eme(# a(d F!rm Pr$%!#a"!'!#y: Ma(u%aur!() Se$r $%

Pa7!#a(9Available at ""RN .10,349

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!( UK Ma(u%aur!() I(du#ry9Available at ""RN .3',40'9

1. A(a(daaya(a(* S9 -/018.9 W$r7!() Ca6!#a' Ma(a)eme(# a(d C$r6$ra#e

Pr$%!#a"!'!#y: E5!de(&e %r$m Pa(e' Da#a A(a'y! $% Se'eed u$#ed

C$m6a(!e !( Sr! La(7a9Available at ""RN .34,'09

1?. G!''* A9* B!)er* N9* < Ma#hur* N9 -/010.9 The re'a#!$(h!6 "e#+ee( +$r7!()

&a6!#a' ma(a)eme(# a(d 6r$%!#a"!'!#y: E5!de(&e %r$m #he U(!#ed S#a#e9)usiness

an! %conoics Journal* 10-1.* 139

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1. Pa(!)rah!* A9 K9 -/012.9 Ne)a#!5e W$r7!() Ca6!#a' a(d Pr$%!#a"!'!#y: A(

Em6!r!&a' A(a'y! $% I(d!a( Ceme(# C$m6a(!e9International Journal of

Research in Coerce 5 *ana+eent* '-.9

/0. E(,5!#* 9* Graham* M9* < N!77!(e(* 9 -/018.9 The !m6a $% +$r7!() &a6!#a'

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F!('a(d9Research in International )usiness an! &inance* 3.* 2389

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39/41

Table ":

Correlations

ACP ITID APP CCC NOP ROA

ACP Pear$(

C$rre'a#!$( 1 9202 91/2 92/ 9/? 900

S!)9 -/3#a!'ed. 902 980 90/8 9080 9?

N 8? 8? 8? 8? 8? 8?

ITID Pear$(

C$rre'a#!$(9202 1 391/ 9/2 98/2 9/2

S!)9 -/3#a!'ed. 902 921 9000 9002 910

N 8? 8? 8? 8? 8? 8?

APP Pear$(C$rre'a#!$(

91/2 391/ 1 392 9// 912?

S!)9 -/3#a!'ed. 980 921 9000 911 9241

N 8? 8? 8? 8? 8? 8?

CCC Pear$(

C$rre'a#!$(392/ 9/2 392 1 90/4 39128

S!)9 -/3#a!'ed. 90/8 9000 9000 9?4 928

N 8? 8? 8? 8? 8? 8?

NOP Pear$(

C$rre'a#!$(39/? 398/2 39// 390/4 1 9?/

S!)9 -/3#a!'ed. 9080 9002 901 9084 9000

N 8? 8? 8? 8? 8? 8?

ROA Pear$(

C$rre'a#!$(3900 39/2 912? 39128 9?/ 1

S!)9 -/3#a!'ed. 90? 910 9241 928 9000

N8? 8? 8? 8? 8? 8?

9 C$rre'a#!$( ! !)(!%!&a(# a# #he 0904 'e5e' -/3#a!'ed.9

9 C$rre'a#!$( ! !)(!%!&a(# a# #he 0901 'e5e' -/3#a!'ed.9

Table (:

29


40/41

$anel ,L%

De6e(de(# ar!a"'e: NOP

Me#h$d: Pa(e' Lea# S,uare

Da#e: 1/@0@14 T!me: /2:/?

Sam6'e: /00 /018Per!$d !(&'uded:

Cr$3e!$( !(&'uded: ?

T$#a' 6a(e' -"a'a(&ed. $"er5a#!$(: 8?

ar!a"'e C$e%%!&!e(# S#d9 Err$r #3S#a#!#!& Pr$"9

LNACP 49420 19111 2920/8 09001

LNAPP 3189??41 491012 3/98201 09011/

LNITID /928282 89?28428 4988012 090000CCC 309181/ 09022888 389//80/ 090001

C 31494?8?4 92182 3/924018 090/28

R3,uared 098? Mea( de6e(de(# 5ar 9240

Adu#ed R3,uared 0988/// S9D9 de6e(de(# 5ar 9/1?40

S9E9 $% re)re!$( 8988/28 A7a!7e !(%$ &r!#er!$( 9008/

Sum ,uared re!d /9821 S&h+ar= &r!#er!$( 9/0/2

L$) '!7e'!h$$d 312911 Ha((a(3u!(( &r!#er9 90?11//

F3#a#!#!& 109214 Dur"!(3Wa#$( #a# 09??41

Pr$"-F3#a#!#!&. 0900000

Table +:

$anel ,L%

De6e(de(# ar!a"'e: ROA

Me#h$d: Pa(e' Lea# S,uare

Da#e: 1/@0@14 T!me: /2:2

Sam6'e: /00 /018Per!$d !(&'uded:

Cr$3e!$( !(&'uded: ?

T$#a' 6a(e' -"a'a(&ed. $"er5a#!$(: 8?

ar!a"'e C$e%%!&!e(# S#d9 Err$r #3S#a#!#!& Pr$"9

LNACP ?904200 /922 /91102 09004

LNAPP 380921/ 9/281 38920/ 090001

LNITID 8?900 982 912//// 090000

CCC 309214 0904418 3498/1? 090000

30


41/41

C 39812? 1092?22 309120 09480

R3,uared 098?/41 Mea( de6e(de(# 5ar 109482?

Adu#ed R3,uared 0982880 S9D9 de6e(de(# 5ar 1091?4/

S9E9 $% re)re!$( 90408 A7a!7e !(%$ &r!#er!$( 900?24Sum ,uared re!d /4/292?2 S&h+ar= &r!#er!$( 9/02/?/

L$) '!7e'!h$$d 3129/00? Ha((a(3u!(( &r!#er9 90?/0/8

F3#a#!#!& 1090/0 Dur"!(3Wa#$( #a# 0941/2

Pr$"-F3#a#!#!&. 0900000?

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