Taimoor Khanzada reseach Proposal (2914).doc

7/25/2019 Taimoor Khanzada reseach Proposal (2914).doc

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Cash Conversion Cycle & Firms Performance of Pakistani Firms

A thesis submitted

By

Muhammad Taimoor Khanzada (2914)

To

Dr. Muhammad Azam

Department of Business Administration

n partia! fu!fi!!ment of

The re"uirement for the

De#ree of

MA$T%& ' B$*%$$ ADM*$T&AT'*

n*A*+%

This thesis has been

a,,epted for the fa,u!ty of

A+-T ' B$*%$$ ADM*$T&AT'*

by/

000000000000000000000000000

Dr. Muhammad Azam


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Abstract

This study ana!yzes the impa,t of +ash +onersion +y,!e on firm profitabi!ity and

performan,e from manufa,turin# se,tors !isted in Kara,hi $to, %3,han#e. ane!

finan,ia! data of si3 manufa,turin# se,tors 5ith different samp!e sizes has been taen for

fie years (2664 to 2669). +anoni,a! re#ression has been used as a statisti,a! te,hni"ue to

obtain the resu!ts for identifyin# the impa,t of four independent ariab!es of +ash

+onersion +y,!e on t5o dependent ariab!es of firm7s profitabi!ity and performan,e.

The ana!ysis ,on,!uded that +ash +onersion +y,!e has a si#nifi,ant impa,t on firm7s

performan,e and profitabi!ity. Mana#ers ,an improe their firm7s profitabi!ity and

performan,e by redu,in# nentory turnoer in days8 Aera#e re,eiab!e turnoer in days

and +ash +onersion +y,!e8 5hi!e the in,rease in A,,ounts payab!e turnoer in days 5i!!

enhan,e the profitabi!ity and performan,e of the firm8 5hi,h 5i!! ma3imizes the 5ea!th

of shareho!ders 5hi,h is the u!timate #oa! of any or#anization.

Key Words: Cash Conversion Cycle, Firms Performance

Table of contents


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Abstract--------------------------------------------------------------------------------------

2

1. ntrod!ction--------------------------------------------------------------------------- "

1.1 Ba,#round:

1.2 rob!em statement ;

1.< &esear,h "uestions ;

1.4 'b=e,ties of the resear,h ;1.> $i#nifi,an,e of the study?

1.: $,ope of the study ?

1.; -imitations?

1.? De!imitations ?

2 #iterat!re $evie%----------------------------------------------------- 16

< ethodolo'y------------------------------------------------------------ 14


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4.8.(b) $tandardized +anoni,a! +oeffi,ients for the irms7

erforman,e @ariab!es---------------------------------------------------- 444.9. +orre!ation bet5een the +++ @ariab!es and their

+anoni,a! @ariab!es4>4.16. +orre!ation bet5een the irms7 erforman,e @ariab!es

and their +anoni,a! @ariab!es 4:4.11. +orre!ations bet5een the +++ @ariab!es and the +anoni,a!

@ariab!es of the irms7 erforman,e @ariab!es 4;

4.12. +orre!ations Bet5een the irms7 erforman,e @ariab!es and

the +anoni,a! @ariab!es of the +++ @ariab!e 4?

5. Concl!sion------------------------------------------------------------------ >6

>.1. +on,!usion---------------------------------------------------------------- >6

>.2. indin#s------------------------------------------------------------------- >1

>.1

>.4. uture &e,ommendations------------------------------------------------- >1

:. $eferences------------------------------------------------------------------ >2

Cha)ter * +


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+ ntrod!ction++ ack'ro!nd:

+ash is !ifeb!ood of any or#anization or business in order to meet its ob!i#ations. A +ash

+onersion ,y,!e measures the time span of a ,ompany8 5hi,h taes to ,onert its

inentory into ,ash8 re,eie ,ash from its re,eiab!es and sett!e its payab!es. n

,orporations ,ash ,onersion ,y,!e is an important indi,ator for inestors in order to

de,ide about their future inestment and earnin#s re#ardin# the industry. +++ represents

the !i"uidity of a firm 5hi,h sho5s the finan,ia! stren#th of the ,ompany. orin#

,apita! mana#ement of any ,ompany heai!y depends on ,ash ,onersion ,y,!e 5hi,h

in,!udes ,ertain ratios !ie inentory turnoer in days8 payab!e period in days8 re,eiab!e

period in days et,. inan,ia! ana!yst indi,ates that ,urrent ratios of a firm are the ey

indi,ators of the !i"uidity of a ,ompany as they affe,t the profitabi!ity and the maret

a!ue of the or#anization8 5hi,h sho5s the future inestment abi!ity of a ,ompany.

$upp!ier is a ey fa,tor to the business performan,e and supports 5ide!y to #ro5

the business effe,tie!y and effi,ient!y. $upp!iers in aistan are ery ,ash ,ons,ious and

5ant their re,eiab!es to sett!e as soon as possib!e8 so if the ,ompanies hae !ar#e ,ash

,y,!e than it 5i!! be diffi,u!t for the ,ompany to sett!e its payab!e "ui,!y8 5hi,h may

harm its maret a!ue in the eyes of supp!iers. or main# payment to supp!iers "ui,!y8

,ompany has to re,oer its money from its ,ustomers and try to desi#n effi,ient ,redit

po!i,ies in order to hae fast !i"uidity8 5hi,h he!ps in in,reasin# the profit of the

,ompany. ndustries of aistan ,ontribute a ma=or share in the e,onomy of aistan.

$in,e the pri,es of a!! basi, #oods are sensitie to the e,onomi, #ro5th of the ,ountry


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be,ause of 5hi,h these industries are ma=or p!ayer of the finan,ia! maret. ndustries in

aistan hae fa,ed many ,han#es after the e,onomi, do5nfa!! in the 5ho!e 5or!d. The

period of 266> to 2669 is the post re,ession period8 durin# 5hi,h many ,han#es hae

o,,urred in the inestor7s behaior8 po!i,ies8 ,onfiden,e !ee! of businessmen and so

many other thin#s. The ,han#es in the aistan7s Ta3es8 nestin#8 etro!eum and

different po!i,ies hae !eft a si#nifi,ant impa,t on the business of many ,ompanies8

5hi,h re"uires to be ,onsidered for resear,h in order to ana!yze its effe,t for future

po!i,ies.

+. Problem /tatement:

A resear,h 5as done (Abdu! &ehman Mohammad *asr8 266;) on the effe,ts of

,ash ,onersion ,y,!e on the performan,e of !isted ,ompanies in K$% and 5as

#enera!ized on a!! the se,tors in the business industry of aistan8 5hi,h is not

appropriate8 be,ause different se,tors hae different nature of business8 5hi,h a!so affe,ts

de,isions re#ardin# their !i"uidity and optima! usa#e of 5orin# ,apita!. This resear,h

5i!! e3hibit a!! the impa,ts of different finan,ia! ratios and the ,ash ,onersion ,y,!e on

profitabi!ity8 !i"uidity and maret a!ue of different business se,tors. This si#nifi,ant

dis,ussion of ,ash ,onersion ,y,!e8 its different ,omponents and its ,onse"uen,es on

su,,ess !eads to the "uestions 5hi,h 5i!! be ana!yzed/

+0 $esearch 1!estion:

Does ,ash ,onersion ,y,!e impa,t ary on different manufa,turin# business se,tors of

aistanC

+2 3b4ectives of the $esearch:

or the ana!ysis of these "uestions8 hae ,ome up 5ith ,ertain ob=e,ties8 5hi,h

5i!! e3hibit si#nifi,ant aspe,t of ,ompany7s finan,ia! positions of 16 different se,tors8

5hi,h are taen as a resear,h samp!e !isted in K$%. The ,ore ob=e,ties of this resear,h

are as fo!!o5s/

1 The ,onne,tion bet5een data e3tra,ted from the finan,ia! statements 5i!! be

tested 5ith the he!p of statisti,a! ana!ysis too!s.


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2 The ea!uation of the impa,ts of arious ,omponents of ,ash ,onersion ,y,!e

on profitabi!ity and earnin# per share.


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the effe,ts of the ariab!es re!ated to 5orin# ,apita! mana#ement 5hi!e there are a!so

other areas of finan,e 5hi,h are re!ated to firm7s performan,e.

Cha)ter * .


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. #iterat!re $evie%

Different affe,ts of orin# +apita! mana#ement on the profitabi!ity of !isted firms has

been ana!yzed in the !iterature. @arious empiri,a! studies Abdu! &ehman Mohammad

*asr (266;) and Ta!at Afza and Mian $a=id *azir8 266;E on the affe,ts of orin#

+apita! mana#ement on profitabi!ity of firms #uided us to se!e,t a set of e3p!anatory

ariab!es that are 5ide!y used and found to be important for the resear,h. or e3amp!e

M. A. Fariya5ati8 et a!8 (266;)G Amar=it Hi!! et a!8 (2616)G Katerina -yroudi8 Iohn

-azaridis8 (2666)G A!i yar8 (2669) and Daid M.Mathua8 (2669)E ea!uated ho5

orin# +apita! mana#ement re!ates to the profitabi!ity8 size and !i"uidity of the firms.

$eera! resear,hers hae studied the effe,ts of orin# +apita! mana#ement on arious

profitabi!ity ariab!es of the firms in different re#ions of the 5or!d. Those ariab!es

in,!ude ,ash ,onersion ,y,!e8 earnin# before ta38 size of the firm and !i"uidity.

Ta!at Afza and Mian $a=id *azir8 266;8 Abdu! &ehman Mohammad *asr8 266;8 M. A.

Fariya5ati8 et a!8 266;8 .M Amir $hah and Aisha $ana8 266:8 Amar=it Hi!! et a!8 2616 and

Daid M.Mathua8 2669 ea!uated the affe,ts of orin# +apita! mana#ement on the

profitabi!ity8 !i"uidity and performan,e of the firms by usin# '-$ mode!. They find the

ne#atie re!ationship bet5een orin# +apita! mana#ement and profitabi!ity of the firm.

They a!so ,on,!uded that de,rease in ,ash ,onersion ,y,!e in,reases the return to share

ho!ders of the firms. $imi!ar!y many resear,hes hae been done on these ariab!es 5ith

different mode!s !ie affe,ts of !i"uidity8 !eera#e and size on the profitabi!ity of the firms

(Manue! -. Iose et a!8 199:)8 (J. Iama! Fubairi and Abdu! &ashid8 266>).There are a!so

some other resear,h re!ated to these ea!uations !ie effe,ts of +apita! e3penditure on

orin# +apita! mana#ement (B.A &an=ith Appuhami8 266?)8 +orporate +ash Jo!din#s

of the firm on diidend payments8 !eera#e and firm size (o!f#an# Drobetz and

Matthias +. Hrnin#era8b8 266:)8 affe,ts of hed#in# on firm7s a!ue (Aziz A. -ooman8

2664).


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The +ash +onersion +y,!e is one of the ma=or ,omponents of orin# +apita!

mana#ement. t is a!so important for those ,ompanies 5hi,h hae !i"uidity prob!ems or

run their most of the business on ,ash basis. +++ determines the performan,e of any

business or#anization re#ard!ess of the business nature. The studies that find a ne#atie

re!ationship of +++ on firm profitabi!ity and performan,e are/ Abdu! &ehman

Mohammad *asr8 (266;)G A!i yar8 (2669)G M. A. Fariya5ati8 et a!8 (266;)G Ta!at Afza

and Mian $a=id *azir8 (266;)G *or %di Azhar Binti Mohamad8 *oriza Binti Mohd $aad

(2616)G Juyn# hon# Don#8 Iyhtay $u8 (2616)E. There are a!so some studies that

ea!uate a positie re!ationship of ,ash ,onersion ,y,!e on profitabi!ity and performan,e

of the firm8 5hi,h are/ Amar=it Hi!! et a!8 (2616)G Katerina -yroudi8 Iohn -azaridis8

(2666)E. Daid M.Mathua (2669) had stated that in,rease in a,,ount re,eiab!e turnoer

and inentory turnoer de,reases the profitabi!ity 5hi!e in,rease in a,,ounts payab!e

turnoer in,reases the profitabi!ity of the firms8 5hi!e these ,!aims 5ere a!so supported

by Kesseen ada,hi8 266: by findin# these effe,ts on different se,tors in $M%7s by

usin# independent samp!e ttest. $.M Amir $hah and Aisha $ana (266:) a!so

a,no5!ed#e these ,!aims in the study of oi! and #as se,tor of aistan. A!! the aboe

studies used the statisti,a! te,hni"ue of re#ression for the ana!ysis8 e3,ept A!i yar

(2669) 5ho imp!emented A*'@A te,hni"ue for determinin# the differen,es in se,torsaera#e resu!ts.

Manue! -. Iose et a!8 (199:) ,!aimed that a##ressie 5orin# ,apita! po!i,ies resu!ts in

hi#h profitabi!ity and moreoer stated that in industries 5here a##ressie 5orin# ,apita!

po!i,ies are profitab!e8 the profit appears in terms of both &eturn on Assets (&'A) and

&eturn on %"uity (&'%). +ontrary to Manue! -. Iose et a!8 (199:)G Ta!at Afza and Mian

$a=id *azir (266;) stated ne#atie affe,ts of a##ressie inestment and finan,in#

de,isions on maret rate of return and ris of the firms by usin# return on assets8 e"uity

and Tobin7s " as profitabi!ity indi,ators. urther empiri,a! studies (Iames A. Hentry8 et a!)

,on,!uded that 5ei#hted operatin# ,y,!e and 5ei#hted ,ash ,onersion ,y,!e he!ps the

mana#ement to shorten the ,ash ,onersion ,y,!e of the ,ompany8 5hi,h represents the

effi,ient 5orin# ,apita! mana#ement of the or#anization.


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Those firms 5hi,h ho!d more ,ash ensure their ,ontinuous inestment 5hether their ,ash

f!o5 is ery !o5 or the fund in the maret is e3pensie8 as in diffi,u!t period7s e3,ess

,ash !eads the firm to aoid re"uired ,han#es (Tim '!per et a!8 199;). n re!ation of this

resear,h (o!f#an# Drobetz and Matthias +. Hrnin#era8b8 266:) sho5ed ne#atie

re!ation bet5een assets tan#ibi!ity and positie re!ation of Diidend payments 5ith ,ash

ho!din#s and non !inear re!ation bet5een !eera#e and ,ash ho!din#s 5hi!e firm size has

no fast impa,t on ,ash.

The +ash ,onersion ,y,!e of !isted ,ompanies is ery important for their profitabi!ity in

order to ma3imize the return to shareho!ders and inestors. eop!e inest in those

,ompanies 5here the returns are hi#h and ,ontinue. A,,ordin# to the !iterature the most

appropriate approa,h is to shorten +++ to ma3imize profitabi!ity for to attra,tin#

inestors and #ro5 a,,ordin#!y. As the methodo!o#y used in the aboe !iterature is

re#ression ana!ysis a,,ordin# to the nature of the data 5hi,h seems most re!iab!e for the

ana!ysis be,ause of sho5in# si#nifi,ant resu!ts ea!uated in the studies.

As the ob=e,tie of this resear,h is to find out the affe,ts of +ash +onersion +y,!e on

firms performan,e of aistani firm7s in different se,tors8 therefore there is !ot of

resear,h !iterature re!ated to the study fo,used on the f!o5 of +ash +onersion +y,!e and

its affe,ts on the different performan,e ratios of the firm. This study departs from

aai!ab!e !iterature as the study 5i!! find the affe,ts of +++ on the performan,e of the

different se,tors !isted in K$%.


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Cha)ter * 0

0 ethodolo'y

This ,hapter 5i!! e3hibit the method and te,hni"ues use to ,ondu,t the resear,h 5ith a

suitab!e frame5or. t in,!udes resear,h approa,h8 purpose and desi#n8 popu!ation and

samp!e size8 data and data ,o!!e,tion te,hni"ue 5ith their reasonin# mandatory for the


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study. The intention is to made the understandin#s and simp!ifi,ation of the steps re!ated

to the resear,h.

0+$esearch A))roach

This study is fo,used on the effe,ts of ,ash ,onersion ,y,!e on firm7s performan,e and

used Luantitatie resear,h approa,h in order to ana!yze resu!ts and its ,on,!usion. n

Luantitatie approa,h primary or se,ondary data is used for ana!ysis 5hi,h is ,o!!e,ted in

the form of numeri,a! a!ues.

$tatisti,a! tab!es8 #raphs and measurab!e a!ues 5hi,h sho5 resu!ts are used for the

presentation and on the basis of that presentation ,on,!usions and re,ommendations hae

been made by the resear,hers. Luantitatie approa,h possesses ob=e,tiity in its study

and their resu!ts are more abso!ute and do not re"uire any "ua!ifi,ation. This approa,h

has been used by the resear,her in order to find out effi,ient resu!ts 5ith reasons.

0. $esearch (esi'n

Due to a "uantitatie resear,h approa,h and hain# a time series data 5ith numeri,a!

a!ues the resear,h desi#n used in this study is +orre!ation resear,h desi#n. This ,o

re!ationa! resear,h ea!uates the de#ree of re!ationship e3ist bet5een the t5o ariab!es5hi,h are dependent and independent ariab!es and he!ps in app!yin# an appropriate

statisti,a! te,hni"ue for ana!ysis by ,reatin# a a!id statisti,a! mode!. t a!so he!ps in

bui!din# hypothesis for the ana!ysis of the data 5ith #reater a,,ura,y in the resu!ts and

in,rease ,onfiden,e in the out,ome of the resu!ts and ensures not to hae any ambi#uity.

The de#ree of re!ationship bet5een these t5o or more "uantifiab!e ariab!es e3pressed as

,orre!ation ,oeffi,ient.

00 odel

The foundation of this resear,h is to e3amine the ,ause and effe,t of Aera#e ,o!!e,tion

period8 inentory turnoer8 A,,ounts payab!e turnoer and +ash ,onersion ,y,!e of

different industries on net operatin# profit and %arnin# per share of those industries. or

Ana!yzin# the +ause and %ffe,t of independent ariab!es on dependent ariab!es 5e hae


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estab!ished si3 ariab!es out of 5hi,h four are independent ariab!es and t5o are

dependent ariab!e.

n order to test the estab!ished hypothesis empiri,a!!y8 the mode! ,an be desi#ned under/

3(8#:

++++=+


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J1a/ Aera#e ,o!!e,tion period8 inentory turnoer8 A,,ounts payab!e turnoer and ,ash

,onersion ,y,!e has si#nifi,ant effe,t on net operatin# profits and %arnin#s er share.

05 /tatistical Techni!e

The statisti,a! te,hni"ue used in this resear,h is ,anoni,a! re#ression. The reasons for

usin# ,anoni,a! re#ression are t5o find the effe,t of different metri, independent ariab!e

on t5o metri, dependent ariab!es. +anoni,a! re#ression is the substitute of mu!tip!e

re#ressions 5hen dependent ariab!e in,reases upto t5o or more in the re#ression mode!.

0" /tatistical Tool

This study in the fie!d of ,orporate finan,e used $tatisti,a! a,a#e for $o,ia! $,ien,e

($$$) and $tatisti,a! Ana!ysis $ystem ($A$) too!s for the ana!ysis of the data to present

resu!ts and #ie ,on,!usion re#ardin# the resear,h.

06 (ata /o!rce

This study needs se,ondary data to be e3tra,ted from the finan,ia! statements of the

,ompanies !isted in K$%. Therefore data is ,o!!e,ted from $tate Ban of aistan18

edera! bureau of statisti,s2and e,onomi, surey of aistan. Annua! a,,ounts of the

!isted ,ompanies of different se,tors 5ere a!so referred for ariab!es. The main purpose

of the study is to ana!yze the effe,ts of +ash ,onersion ,y,!e on firm7s performan,e of

aistan. The time period data of dependent and independent ariab!es has been taen on

year!y basis from 2664 to 2669.

07 ;ariable (escri)tion

The urpose of this resear,h is to find out the inestment opportunities in different

manufa,turin# se,tors businesses in aistan. As 5orin# ,apita! mana#ement is a eryimportant phase of finan,ia! mana#ement 5hi,h si#nifi,ant!y affe,ts the profitabi!ity of

firms ana!yzed in preious studies8 this study 5i!! add more understandin#s of finan,ia!

mana#ement re#ardin# the inestment de,isions re!ated to aistan7s business s,enario.

1http/OO555.statpa.#o.pOdeptsOinde3.htm!2http/OO555.sbp.or#.pOe,odataOinde32.asp
http://www.statpak.gov.pk/depts/index.htmlhttp://www.sbp.org.pk/ecodata/index2.asphttp://www.statpak.gov.pk/depts/index.htmlhttp://www.sbp.org.pk/ecodata/index2.asp


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n this resear,h 5e 5i!! study the effe,ts of +ash +onersion +y,!e on the performan,e

indi,ators of 16 different manufa,turin# se,tors !isted in K$%. The des,ription of the

re!ated ariab!es of the resear,h are #ien be!o5

07+ Avera'e Collection Period in days

Aera#e ,o!!e,tion period e3hibits the information about the ,ash

,o!!e,tions 5ith in period of time of any or#anization from its sa!es. Many

,ompanies in the maret se!! their produ,ts or seri,es on ,redit basis in

order to in,rease their sa!es and than ,o!!e,t ,ash after ,redit period to

fa,i!itate the ,ustomers.

The period of ,o!!e,tin# ,ash is ery important for any or#anization in

order to maintain their business as it is a !ife b!ood for any or#anization.

+ompanies do this a,tiity of ,o!!e,tin# ,ash 5ith the defined ,redit terms

and po!i,y.

The ,o!!e,tion of ,ash depends on the ,redit terms of businesses due to the

responsibi!ity of a parti,u!ar department to re,eie their ,o!!e,tions from

,ustomers. t is ,a!,u!ated by diidin# a,,ounts re,eiab!e from sa!es and

mu!tip!yin# it from days.

07. nventory T!rnover in days

nentory turnoer in days represents ho5 many times inentory

pur,hased from the maret and issued to the produ,tion of the ,ompany. t

is a ariab!e 5hi,h sho5s the produ,tion effi,ien,y of any or#anization

re#ardin# the pur,hases of the inentory. t is ,a!,u!ated by diidin#

inentories from pur,hases and mu!tip!yin# it from days.

070 Acco!nts Payable T!rnover in days

A,,ounts payab!e turnoer te!!s the time ,ompany taes to pay the amount

of ,ash to the supp!iers of the business. t is a ery important ratio for

ho!din# ,ash 5ithin the ,ompany in order to inest in the maret to earn


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profit. t is ,a!,u!ated by diidin# a,,ounts payab!e from ,ost of sa!es and

mu!tip!yin# it from days.

072 Cash Conversion Cycle

t is a ,omprehensie time period ,a!,u!ated by addin# a,,ounts re,eiab!e

turnoer in days in inentory turnoer in days and by subtra,tin# a,,ounts

payab!e turnoer in days. t represents the 5ho!e ,ash ,y,!e of any

or#anization and its ,ash f!o5s re#ardin# its business. t he!ps in

identifyin# the 5orin# ,apita! of any business uses by the or#anization.

075


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Cha)ter * 2

2 (ata Analysis

2+ ntrod!ction

n this phase of resear,h 5e ana!yze the data ,o!!e,ted from the annua! reports of the

!isted manufa,turin# ,ompanies and the !ibrary of state ban of aistan. By ana!yzin#

the data 5e ,an e3tra,t the information 5hi,h is used for main# summary ,on,!usion

of the resear,h.


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Table 2+: /!mmary /tatistics

Chemical /ector 8ner'y /ector

/* ;ariable < ean/td

(evin a= < ean /td (ev in a

+

Avera'e

CollectionPeriod >in

(ays?

1:2 6 .?> 6.6: 1?:.24 16< :6.


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Period >in

(ays?

2

Cash

Conversion

Cycle

9: 1?.?> 9>.14 1?:.?? ?.:? >:: 4 ?.:; 21.26 :: 6.:< 1.21 2.in

(ays?

1?4 119.?1 26.>> 1>?9.?? ?; 4.12 6.;> 2.9> ?.:6

2

Cash

Conversion

Cycle

1?4


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and the ma3imum of 992.9? days. Aera#e ayment eriod in days has a minimum of

9.: days. +ash +onersion +y,!e has a minimum of

414. %arnin# per $hare has a

minimum of 1>9.:6 and ma3imum of ?:.16.

$u#ar se,tor has a tota! samp!e size of 9:. @ariab!es in %ner#y se,tor are Aera#e

,o!!e,tion period in days8 nentory Turnoer in days8 Aera#e ayment eriod in days8

+ash +onersion +y,!e8 *et 'peratin# rofit and %arnin# per 5ith a mean a!ues of

9.;;8 ?6.;18 ;1.:8 1:4 hain# standard deiation of 11.;48 ?:.?;8

>4.>.148 2>9.92 and ?.:;. n %ner#y $e,tor8 Aera#e +o!!e,tion eriod has a

minimum of 6.61 day and the ma3imum of ;?.>4 days. nentory Turnoer in days has a

minimum of 6.?9 day and the ma3imum of 4:? days. Aera#e ayment eriod in days

has a minimum of 9.:; days and a ma3imum of days. +ash +onersion +y,!e has

a minimum of 1?:.?? days and a ma3imum of ?.:? days. *et 'peratin# rofit has a

minimum of 1;


22/54


23/54


23

hain# a minimum of 6.66 days and a ma3imum of ?.;; days8 *et 'peratin# rofit has a

mean a!ue of >.1: 5ith a standard deiation of 2.?2 hain# a minimum of 6.66 and a

ma3imum of ?.;; and %arnin# per share has a mean a!ue of 6.?4 5ith a standard

deiation of 1.16 hain# a minimum of 2.in

days?

+orre!ation -0.35 -0.32 +orre!ation 0.503 0.300

p @a!ue 0.00 0.00

p @a!ue 0.000 0.003

nventory

T!rnover >in

(ays?

+orre!ation 0.21 0.25 +orre!ation 0.077 -0.113

p @a!ue 0.01 0.00 p @a!ue 0.455 0.273Avera'e

Payment

Period >in

days?

+orre!ation 0.13 0.03 +orre!ation -0.186 -0.212

p @a!ue 0.10 0.74 p @a!ue 0.069 0.038Cash

Conversion

Cycle

+orre!ation 0.02 0.13 +orre!ation 0.239 0.055

p @a!ue 0.82 0.10 p @a!ue 0.019 0.593

Tab!e 4.4 sho5s the ,orre!ation bet5een dependent and independent ariab!es in different

se,tors. n +hemi,a! $e,tor8 Aera#e +o!!e,tion eriod has a si#nifi,ant moderate

ne#atie ,orre!ation 5ith *et 'peratin# rofit 6. and %arnin# per $hare 6.. n $u#ar $e,tor8 Aera#e +o!!e,tion eriod has a moderate

ositie ,orre!ation 5ith *et 'peratin# rofit 6.>6< and %arnin# per $hare 6.


24/54


24

Avera'e

Collection

Period >in

days?

+orre!ation -0.138 -0.041 +orre!ation 0.153 -0.223

p @a!ue 0.063 0.577 p @a!ue 0.124 0.024

nventory

T!rnover >in

(ays?

+orre!ation -0.231 -0.198 +orre!ation -0.057 -0.059

p @a!ue 0.002 0.007 p @a!ue 0.568 0.552Avera'e

Payment

Period >in

days?

+orre!ation -0.157 -0.062 +orre!ation 0.195 -0.183

p @a!ue 0.033 0.404 p @a!ue 0.049 0.065

Cash

Conversion

Cycle


p @a!ue 0.818 0.390 p @a!ue 0.791 0.417

Correlation bet%een Cash Conversion Cycle and the

Firms Performance

Correlation bet%een Cash Conversion Cycle and

the Firms Performance

Te=tile /ectorin

days?


p @a!ue 0.000 0.000 p @a!ue 0.0000 0.0241

Cash

Conversion

Cycle

+orre!ation 0.483 0.165 +orre!ation -0.4692 -0.2078

p @a!ue 0.000 0.000 p @a!ue 0.0000 0.0535

n %n#ineerin# $e,tor8 nentory Turnoer has a si#nifi,ant moderate ne#atie ,orre!ation

5ith *et 'peratin# rofit 6.2.


25/54


25

n Te3ti!e $e,tor8 Aera#e +o!!e,tion eriod has a si#nifi,ant moderate positie

,orre!ation 5ith *et 'peratin# rofit 6.2128

hi!e +ash +onersion +y,!e has a moderate positie ,orre!ation 5ith *et 'peratin#

rofit 6.4?< and 5ea positie ,orre!ation 5ith %arnin# per $hare 6.1:>. n +ement

$e,tor a!! ariab!es are si#nifi,ant!y ,orre!ated 5ith ea,h other. Aera#e +o!!e,tion

eriod has a si#nifi,ant moderate ne#atie ,orre!ation 5ith *et 'peratin# rofit 6.

and %arnin# per $hare 6.


26/54


26

. 0.277815 0.245879 0.09951 0.077181

8i'enval!es of nv>8?9

B Can$s >+- Can$s?

8i'enval!e (ifference Pro)ortion C!m!lative0.7051 0.6215 0.894 0.894

0.0836 0.106 1

Test of 9@: The canonical correlations in the c!rrent ro% and all that follo% are Dero

#ikelihood

$atio

A))ro=imate

F ;al!e

0.54120849 7.28 8 162 .1 sho5s the ,orre!ation bet5een the dependent and independent ariab!es

5hi,h ,an ary from 1 (stron#!y ne#atie ,orre!ation) to P1 (stron#!y ositie

,orre!ation) represented throu#h the measure of ,anoni,a! ,orre!ation. n +hemi,a! se,tor8

the first dependent ariab!e8 'peratin# rofit is moderate!y ,orre!ated 5ith independent

ariab!es 6.:4. Ad=usted ,anoni,a! ,orre!ation sho5s the more a,,urate

a!ue ,orre!ation bet5een the dependent and independent ariab!es 5hi,h is 6.:22:1;

and 6.24>?;9 after dedu,tin# the standard error. The tab!e a!so sho5s %i#en a!ues8

5hi,h represents arian,e ,aptured by the ,omponents hain# a a!ue of 6.;6>1 and

6.6?412 5ith an a!ue of ;.2? hain# a

si#nifi,ant a!ue 6.6661 and 6.922? 5ith an a!ue of 2.29 hain# a ,!ose si#nifi,ant

a!ue of 6.6?4?8 5hi,h sho5s that 5e re=e,t our nu!! hypothesis.

Table 2"+ !ltivariate /tatistics and F A))ro=imation

/B. B.5 Wilks

#ambda

0.5412

08 7.28 8 162


27/54


27

9otellin'-

#a%ley

Trace

0.7887

44 7.93 8 113.41


28/54


28

/HGA$ /8CT3$

Table 25. Canonical Correlation Analysis >Test of 9@?

Canonical

Correlation

Ad4!sted

Canonical

Correlation

A))ro=imate

/tandard 8rror

/!ared

Canonical

Correlation

+ 0.52699 0.505225 0.074105 0.277718

. 0.21696 0.201746 0.097768 0.047071


B Can$s >+- Can$s?

8i'enval!e (ifference Pro)ortion C!m!lative

0.3845 0.3351 0.8862 0.8862

0.0494 0.1138 1


#ikelihood $atio A))ro=imate

F ;al!e

0.68828316 6.23 6 182


29/54


29

Pillais Trace

0.324789

44 5.95 6 184


30/54


30

0.92281882 2.29 3 82 0.0848

n %n#ineerin# se,tor8 'peratin# rofit is moderate!y ,orre!ated 5ith independent

ariab!es 6.:4. Ad=usted ,anoni,a! ,orre!ation bet5een the dependent

and independent ariab!es in %n#ineerin# se,tor are 6.:22:1; and 6.24>?;9 after

dedu,tin# the standard error. The %i#en a!ues of the ,omponents are 6.;6>1 and 6.6?4126 5ith an a!ue of ;.2? hain# a si#nifi,ant

a!ue 6.6661 and 6.922?1 5ith an a!ue of 2.29 hain# a!ue of 6.6?4?8 5hi,h

sho5s that the resu!ts are si#nifi,ant and 5e re=e,t our nu!! hypothesis.

Table 2"0 !ltivariate /tatistics and F A))ro=imation

/B. B.5 Wilks #ambda

0.541208

49 7.28 8 162


31/54


31

Table 252 Canonical Correlation Analysis >Test of 9@?

Canonical

Correlation

Ad4!sted

Canonical

Correlation

A))ro=imate

/tandard 8rror

/!ared

Canonical

Correlation

+ 0.36637 0.331858 0.085724 0.134227

. 0.090874 0.043891 0.098197 0.008258


B Can$s >+- Can$s?

8i'enval!e (ifference Pro)ortion C!m!lative

0.155 0.1467 0.949 0.949

0.0083 0.051 1


#ikelihood $atio A))ro=imate

F ;al!e

0.85862353 2.59 6 196 0.0196

0.99174192 0.41 2 99 0.6633

n %ner#y se,tor8 'peratin# rofit is 5ea!y ,orre!ated 5ith independent ariab!es

6.?:2< 5ith an a!ue of 2.>9 hain# a si#nifi,ant a!ue

6.619: and 6.991;4192 5ith an a!ue of 6.41 hain# a!ue of 6.::


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32

Wilks #ambda

0.8586235

3 2.59 6 196 0.0196

Pillais Trace

0.1424849

3 2.53 6 198 0.022

9otellin'-#a%ley

Trace

0.1633638

1 2.66 6 128.9 0.0184$oys Greatest

$oot

0.1550369

7 5.12 3 99 0.0025

n %ner#y se,tor8 i!s7 -ambda has a a!ue of 6.?>?:2< 5ith a!ue of 2.>9 hain#

a!ue of 6.619:8 i!!ai7s Tra,e has a a!ue of 6.1424?49< 5ith the a!ue of 2.>QQ 1 6.24QQ

p@a!ue 6.66 6.66 6.66

Cash

Conversion

Cycle

+orre!ation 6.6< 6.?2QQ 6.24QQ 1

p@a!ue 6.;1 6.66 6.66 QQ+orre!ation is si#nifi,ant at the 6.61 !ee! (2tai!ed).

Q+orre!ation is si#nifi,ant at the 6.6> !ee! (2tai!ed).

Correlations

/!'ar /ector

Avera'e

Collection

Period in

(ays

nventory

T!rnover

in (ays

Avera'e

Payment

Period in

(ays

Cash

Conversion

Cycle

Avera'e

Collection

Period in(ays

+orre!ation 1 6.12 6.6? 6.2?QQ

p@a!ue 6.2> 6.44 6.61

nventory

T!rnover in

(ays

+orre!ation 6.12 1 6.21Q 6.?1QQ

p@a!ue 6.2> 6.64 6.66Avera'e

Payment

Period in

(ays

+orre!ation 6.6? 6.21Q 1 6.


37/54


37

8n'ineerin'

/ector

Avera'e

Collection

Period in

(ays

nventory

T!rnover

in (ays

Avera'e

Payment

Period in

(ays

Cash

Conversion

Cycle

Avera'e

Collection

Period in

(ays

+orre!ation 1 6.6< 6.?1QQ 6.4QQ 6.2:QQ 6.49QQ 1.666

p@a!ue 6.666 6.669 6.666

QQ+orre!ation is si#nifi,ant at the 6.61 !ee! (2tai!ed).


Correlations


38/54


38

Te=tile /ector

Avera'e

Collection

Period in

(ays

nventory

T!rnover

in (ays

Avera'e

Payment

Period in

(ays

Cash

Conversion

Cycle

Avera'e

Collection

Period in

(ays

+orre!ation 1 6.42QQ 6.64 6.>2QQ

p@a!ue 6.66 6.;QQ

p@a!ue 6.66 6.66 6.66

Avera'e

Payment

Period in

(ays

+orre!ation 6.64 6.24QQ 1 6.;QQ 6. !ee! (2tai!ed).

Correlations

Cement /ector

Avera'e

Collection

Period in

(ays

nventory

T!rnover

in (ays

Avera'e

Payment

Period in

(ays

Cash

Conversion

Cycle

Avera'e

CollectionPeriod in

(ays

+orre!ation 1 6.QQ

p@a!ue 6.66 6.66 6.66

nventory

T!rnover in

(ays

+orre!ation 6.?QQ 6.QQ

p@a!ue 6.66 6.66 6.66Avera'e

Payment

Period in

(ays

+orre!ation 6.?QQ 1 6.1?

p@a!ue 6.66 6.66 6.16

Cash

ConversionCycle

+orre!ation 6.>>2QQ 6.4QQ 6.1;; 1.666

p@a!ue 6.666 6.661 6.161

QQ+orre!ation is si#nifi,ant at the 6.61 !ee! (2tai!ed).


Table 20: Correlation amon' the Firms Performance ;ariables


39/54


39

Correlations Amon' the Firms Performance ;ariables

Chemical /ector>1:QQ >1:QQ 1 8arnin'Per /hare

+orre!ation 6.:62QQ 1

pa!ue 6.6666 pa!ue 6.666

8n'ineerin'

/ector


40/54


40

Table 26 >a?: $a% Canonical Coefficients for the Cash Conversion Cycle ;ariables

$a% Canonical Coefficients for the Cash Conversion Cycle ;ariables

Chemical

/ectorCCC+ CCC.

/!'ar

/ectorCCC+ CCC.

Avera'e Collection

Period in (ays

-0.05157

46

-0.78756

74

Avera'eCollection

Period in (ays

0.078344

229

0.0018440

5

nventory

T!rnover >in (ays?

-

0.30462

27

-

0.46961

41

nventory

T!rnover >in

(ays?

0.001011

654

0.0098084

41

Avera'e Payment

Period >in (ays?

1.08861

30

0.50603

52

Avera'e

Payment Period

>in (ays?

-

0.005602

63

0.0068464

34

Cash Conversion

Cycle

0.69636

63

0.63024

36

Cash

Conversion

Cycle 0 0

8n'ineerin'

/ectorCCC+ CCC.

8ner'y

/ectorCCC+ CCC.

Avera'e Collection

Period in (ays

0.00292

97

0.00592

3

Avera'e

Collection

Period in (ays

0.010688

352

-

0.0073131

5

nventory

T!rnover >in (ays?

0.00920

61

-

0.00578

8

nventory

T!rnover >in

(ays?

0.002755

33

-

0.0387041

2

Avera'e Payment

Period >in (ays?

0.00101

37

0.00177

79

Avera'e

Payment Period

>in (ays?

0.012493

682

0.0093786

7

Cash Conversion

Cycle 0 0

Cash

Conversion

Cycle 0 0

Te=tile

/ectorCCC+ CCC.

Cement

/ectorCCC+ CCC.

Avera'e Collection

Period in (ays

-

0.01560

7

0.40061

1

Avera'e

Collection

Period in (ays

-

0.051574

62

-

0.7875673

6

nventory

T!rnover >in (ays?

0.35135

2

0.24836

28

nventory

T!rnover >in

(ays?

-

0.304622

75

-

0.4696140

7

Avera'e Payment

Period >in (ays?

-

0.32699

5

0.64185

38

Avera'e

Payment Period

>in (ays?

1.088612

97

0.5060351

52

Cash Conversion

Cycle

0.41354

22

-

0.01993

2

Cash

Conversion

Cycle

0.696366

316

0.6302436

13


41/54


41

Table 26 >b?: $a% Canonical Coefficients for the Firms

Performance ;ariables

$a% Canonical Coefficients for the Firms Performance ;ariables

Chemical

/ectorFP+ FP.

/!'ar

/ectorFP+ FP.


42/54


42

Table 27 >a?: /tandardiDed Canonical Coefficients for Cash Conversion

Cycle ;ariables

/tandardiDed Canonical Coefficients for the Cash Conversion Cycle ;ariables

Chemical

/ectorCCC+ CCC. /!'ar /ector CCC+ CCC.

Avera'e Collection

Period in (ays

-

0.0752

-

1.1479

Avera'e

Collection Period

in (ays

0.9197 0.0216

nventory T!rnover

>in (ays?

-

0.2672 -0.412

nventory

T!rnover >in

(ays?

0.0879 0.8521

Avera'e Payment

Period >in (ays? 0.8131 0.378

Avera'e Payment

Period >in (ays?

-

0.3055 0.3733

Cash Conversion

Cycle 0.7274 0.6583

Cash Conversion

Cycle 0 0

8n'ineerin'/ector

CCC+ CCC. 8ner'y/ector

CCC+ CCC.

Avera'e Collection

Period in (ays 0.282 0.5701

Avera'e

Collection Period

in (ays

0.6389 -

0.4371

nventory T!rnover

>in (ays? 0.8478 -0.533

nventory

T!rnover >in

(ays?

0.0622 -

0.8733

Avera'e Payment

Period >in (ays? 0.2064 0.362

Avera'e Payment

Period >in (ays? 0.6206 0.4659

Cash Conversion

Cycle 0 0

Cash Conversion

Cycle 0 0

Te=tile /ector CCC+ CCC.Cement

/ectorCCC+ CCC.

Avera'e Collection

Period in (ays

-

0.0243 0.623

Avera'e

Collection Period

in (ays

-

0.0752

-

1.1479

nventory T!rnover

>in (ays? 0.2567 0.1815

nventory

T!rnover >in

(ays?

-

0.2672 -0.412

Avera'e Payment

Period >in (ays?

-

0.3257 0.6392

Avera'e Payment

Period >in (ays? 0.8131 0.378

Cash Conversion

Cycle 0.7098

-

0.0342

Cash Conversion

Cycle 0.7274 0.6583

Table 27 >b?: /tandardiDed Canonical Coefficients for the

Firms Performance ;ariables


43/54


43

/tandardiDed Canonical Coefficients for the Firms Performance

;ariables

Chemical

/ectorFP+ FP.

/!'ar

/ectorFP+ FP.


44/54


44

Table 2: Correlation bet%een the Cash Conversion Cycle ;ariables

and their Canonical ;ariables

Correlations et%een the Cash Conversion Cycle ;ariables and Their

Canonical ;ariables

Chemical

/ector CCC+ CCC. /!'ar /ector CCC+ CCC.Avera'e

Collection Period

in (ays

0.51

84

-

0.8079

Avera'e

Collection

Period in (ays

0.95

46

0.092

7

nventory

T!rnover >in

(ays?

0.42

88

-

0.4104

nventory

T!rnover >in

(ays?

0.13

4

0.931

5

Avera'e Payment

Period >in (ays?

0.76

08

-

0.1615

Avera'e

Payment Period

>in (ays?

-

0.36

1

0.547

1

Cash ConversionCycle

0.7355

-0.0537

Cash

ConversionCycle

0.4471

0.5485

8n'ineerin'

/ector CCC+ CCC.

8ner'y

/ector CCC+ CCC.Avera'e

Collection Period

in (ays

0.47

7 0.8455

Avera'e

Collection

Period in (ays

0.79

7

-

0.251

nventory

T!rnover >in

(ays?

0.88

61

-

0.4634

nventory

T!rnover >in

(ays?

0.02

18

-

0.837

Avera'e PaymentPeriod >in (ays?

0.5536 0.7486

Avera'e

Payment Period>in (ays?

0.7887

0.3425

Cash Conversion

Cycle

0.09

79

-

0.7531

Cash

Conversion

Cycle

0.12

95

-

0.737

Te=tile /ectorCCC+ CCC.

Cement

/ector CCC+ CCC.Avera'e

Collection Period

in (ays

0.43

98 0.7066

Avera'e

Collection

Period in (ays

0.51

84

-

0.808

nventory

T!rnover >in(ays?

0.5734 0.5738

nventory

T!rnover >in(ays?

0.4288 -0.41

Avera'e Payment

Period >in (ays? -0.54 0.7207

Avera'e

Payment Period

>in (ays?

0.76

08

-

0.162

Cash Conversion

Cycle

0.96

9 0.1473

Cash

Conversion

Cycle

0.73

55

-

0.054


45/54


45

Table 2+@: Correlation bet%een the Firms Performance ;ariables

the their Canonical ;ariables

Correlations et%een the Firms Performance ;ariables and Their

Canonical ;ariables

Chemical/ector

FP+ FP. /!'ar/ector

FP+ FP.


46/54


46

,orre!ation 5ith 2 in a!! se,tors. %arnin# per share has a moderate or stron# ne#atie or

positie ,orre!ation 5ith both 1 and 2 in a!! the se,tors.

Table 2++: Correlations bet%een the Cash Conversion Cycle ;ariables and

the Canonical ;ariables of the Firms Performance ;ariablesCorrelations et%een the Cash Conversion Cycle ;ariables and the Canonical

;ariables of the Firms Performance ;ariables

Chemical

/ectorFP+ FP. /!'ar /ector FP+ FP.

Avera'e Collection

Period in (ays

0.333

4

-

0.224

4

Avera'e Collection

Period in (ays

0.503

1

0.020

1

nventory

T!rnover >in (ays?

0.275

8 -0.114

nventory

T!rnover >in (ays?

0.070

6

0.202

1

Avera'e Payment

Period >in (ays?

0.489

2

-0.044

9

Avera'e Payment

Period >in (ays?

-0.190

3

0.118

7

Cash Conversion

Cycle 0.473

-

0.014

9

Cash Conversion

Cycle

0.235

6 0.119

8n'ineerin'

/ectorFP+ FP. 8ner'y /ector FP+ FP.

Avera'e Collection

Period in (ays

0.128

7

0.071

9

Avera'e Collection

Period in (ays 0.292

-

0.022

8

nventory

T!rnover >in (ays?

0.239

1

-0.039

4

nventory

T!rnover >in (ays? 0.008 -0.076

Avera'e Payment

Period >in (ays?

0.149

4

0.063

6

Avera'e Payment

Period >in (ays? 0.289

0.031

1

Cash Conversion

Cycle

0.026

4 -0.064

Cash Conversion

Cycle

0.047

5 -0.067

Te=tile /ector FP+ FP. Cement /ector FP+ FP.

Avera'e Collection

Period in (ays

0.221

5

0.056

5

Avera'e Collection

Period in (ays

0.333

4

-

0.224

4

nventory

T!rnover >in (ays?

0.288

9

0.045

9

nventory

T!rnover >in (ays?

0.275

8 -0.114

Avera'e Payment

Period >in (ays?

-

0.271

8

0.057

6

Avera'e Payment

Period >in (ays?

0.489

2

-

0.044

9

Cash Conversion

Cycle

0.488

1

0.011

8

Cash Conversion

Cycle 0.473

-

0.014

9


47/54


47

Aboe Tab!e 4.11 sho5s the ,orre!ation bet5een ea,h ariab!e in one #roup and the

,anoni,a! ariates of the other. &esu!ts are sho5in# that the ,orre!ation bet5een +ash

+onersion +y,!e ariab!es and firm7s performan,e ariab!es is 5ea or moderate in a!!

se,tors8 5hi,h are either positie or ne#atie.

Table 2+.: Correlations bet%een the Firms Performance;ariables and the Canonical ;ariables of the Cash Conversion

Cycle ;ariables

Correlations et%een the Firms Performance ;ariables and the

Canonical ;ariables of the Cash Conversion Cycle ;ariables

Chemical

/ector CCC+ CCC./!'ar

/ector CCC+ CCC.


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that the ,orre!ation bet5een firm7s performan,e ariab!es and ,anoni,a! ariab!es of +ash

+onersion +y,!e is 5ea or moderate in a!! se,tors8 5hi,h are either positie or

ne#atie.

Cha)ter * 5


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Concl!sion5+ Concl!sion:

The present study ea!uates the impa,t of +ash +onersion +y,!e on se,tor 5ise firm7s

performan,e of manufa,turin# firms !isted in K$% inde3. The impa,t of +ash +onersion

+y,!e has been e3amined in arious manufa,turin# se,tors by usin# +anoni,a! re#ression

on ane! data for the time period of 2664 to 2669.

The ,urrent resu!ts are ,onfirmin# the dimensions of +ash +onersion +y,!e used in past

studies a!on# 5ith ne5 dimensions 5hi,h are ,onsistent 5ith the theory of +ash

+onersion +y,!e. This resear,h is ,onsist of t5o dimensions used in this study8 first is

*et operatin# profit8 5hi,h is used in preious studies8 and a ne5 dimension i.e %arnin#

per share has neer used before.

The resu!t sho5s that a!most in eery se,tor8 Aera#e ,o!!e,tion period in days has a

si#nifi,ant ne#atie re!ationship 5ith *et operatin# profit and %arnin# per share.

nentory turnoer in days has a si#nifi,ant ne#atie re!ationship 5ith *et operatin#

profit and %arnin# per share but in fe5 se,tors8 there is positie re!ation bet5een

nentory turnoer in days and *et operatin# profit8 and a!so 5ith %arnin# per share

5hi,h is insi#nifi,ant and =ustified by the theory. Aera#e payment period has ne#atie

re!ationship 5ith both *et operatin# profit and %arnin# per share 5hi,h is ,onsistent 5ith

the studies of (&ehman et a!8 2616) and (&ehman and *sar8 266;). +ash +onersion

+y,!e is a!so sho5in# the ne#atie re!ationship 5ith *et operatin# profit and %arnin# per

share 5hi,h means that if the firm redu,es its +ash +onersion +y,!e than the firm7s

profitabi!ity and performan,e in,reases. The shorter +ash +onersion +y,!e in,reases the

aai!abi!ity of ,ash 5hi,h is benefi,ia! for the firm7s performan,e (Iama! zubairi8 2616).


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'era!! resu!t des,ribes that manufa,turin# ,ompanies of different se,tors !isted in K$%

are ery #ood in mana#in# and improin# its +ash +onersion +y,!e for the ma3imum

performan,e and profitabi!ity of the firm8 5hi,h #ies ma3imum output to share ho!ders.

They are optimisti,a!!y uti!izin# their inestment 5ith an a##ressie approa,h to in,rease

their firm7s performan,e and profitabi!ity.

5. Findin's:

n the duration of 26642616 stron# fa,ts are dis,oered on the sub=e,t of firms7

performan,e of a!! the se,tors that are !isted in K$% 5hi,h are stated be!o5/

+- 'n the 5ho!e the manufa,turin# or#anizations are effe,tie!y and effi,ient!y

mana#in# their +ash +onersion +y,!e for utmost profitabi!ity and performan,e

5hi,h ma3imizes the shareho!der7s 5ea!th.

.- Aera#e payment period has ne#atie re!ationship 5ith both *et operatin# profit

and %arnin# per share.

0- The shorter +ash +onersion +y,!e enhan,es the aai!abi!ity of ,ash 5hi,h is

faorab!e for the firm7s performan,e.

50 $ecommendations:

1 A!! the firms shou!d mana#e inentory in order to aert the sto, of inentory

5hi,h 5i!! !ead to the effe,tie resu!ts of inestment and some standards and

!ee!s shou!d be ensured 5hi,h 5i!! aoid the oer sto,in# of inentory.

2 There are many measures that firms ,an opt for in order to mana#e the inentory

su,h as =ust in time.


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51

1 The %ffe,t of +ash +onersion +y,!e shou!d a!so be ,he,ed on the other

performan,e indi,ators in order to ana!yze the ,omprehensie effe,ts.

2 The effe,t of +ash +onersion +y,!e shou!d a!so be ,he,ed on the

performan,e indi,ators of the finan,ia! institutions !isted in K$%.

$eferences

Abdu! &ehman Mohammad *asr8 Mar,h 266;8 Sorin# +apita! Mana#ement and

rofitabi!ity +ase of aistani irmsU8nternationa! &eie5 of Business

&esear,h apers8 @o!.< *o.18 p.2;9 62??; ssue 248

http/OO555.euro=ourna!s.,omOfinan,e.htm.

Aziz A. -ooman8 26648 SDoes Jed#in# n,rease irm @a!ueC/ %iden,e from 'i! and

Has rodu,in# irmsU8 http/OO555.andre5.,mu.eduOuserOa!


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Iames A. Hentry8 &. @aidyanathan8 Jei ai -ee8 19968 SA ei#hted +ash +onersion

+y,!eU8 @o!.198 *o.18 pp.96998 http/OO555.=stor.or#Ostab!eO


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Abdu! &ehman8 Ta!at Afza8 Abdu! Layyum8 Mehmood Ahmed Bod!a8 2616 Sorin#

+apita! Mana#ement and +orporate erforman,e of Manufa,turin# $e,tor in

aistanU8 nternationa! &esear,h Iourna! of inan,e and %,onomi,s8 $$* 14>6

2??; ssue 4; (2616)8 %uroIourna!s ub!ishin#8 n,. 26168

http/OO555.euro=ourna!s.,omOfinan,e.htm.

Kesseen ada,hi8 266:8 STrends in orin# +apita! Mana#ement and its mpa,t on

irms7 erforman,e/ An Ana!ysis of Mauritian $ma!! Manufa,turin# irmsU8

nternationa! &eie5 of Business &esear,h apers8 @o.2 *o. 2. ',tober 266:8 p.

4> >?.

Daid M.Muthaa8 26698 SThe inf!uen,e of orin# +apita! Mana#ement ,omponents

on ,orporate profitabi!ity/ A surey on Kenyan !isted irmsU8 a,u!ty of

+ommer,e8 $trathmore niersity8 992?8 662668 *airobi8 &esear,h Iourna! of

Business Mana#ement8 26698 A,ademi, =ourna!s n,.

B.A &an=ith Appuhami8 266?8 SThe impa,t of firms7 +apita! e3penditures on orin#

+apita! Mana#ement/ An %mpiri,a! study a,ross ndustries in Thai!andU8

Department of A,,ountin#8 niersity of $ri Iaye5ardenepura8 nternationa!Mana#ement &eie58 @o!.4 *o. 1 266?.

o!f#an# Drobetz and Matthias +. Hrnin#era8b8 266:8 S+orporate +ash Jo!din#s/

%iden,e rom A Different nstitutiona! $ettin#U8

http/OO55z.unibas.,hOfi!eadminO55zOredationOorumODis,ussion0apersO266:O

Manue! -. Iose8 +aro! -an,aster8 and Ierry -. $teens8 199:8 S+orporate &eturn and

+ash +onersion +y,!eU8 Iourna! of %,onomi,s and inan,e8 @o!ume 268 *umber

18 a#es


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J. Iama! Fubairi and Abdu! &ashid8 266>8 S!eera#e8 size of firm and profitabi!ity/ The

,ase of aistan7s automobi!e industryU8 Department of %,onomi,s inan,e8

nstitute of Business Mana#ement (oBM).

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