Liquidity management and profitability of Textile sector of Pakistan

Authors

  • Abdul Hameed The Islamia University of Bahawalpur, Pakistan
  • Altaf Hussain The Islamia University of Bahawalpur, Pakistan.
  • Muhammad Yousuf Khan Marri PARC National Agricultural Research Centre, Park Road, Islamabad, Pakistan.
  • Muhammad Azhar Bhatti The Islamia University of Bahawalpur, Pakistan

DOI:

https://doi.org/10.52131/jom.2021.0302.0029

Keywords:

Returns on Assets, Liquidity Management, Profitability, Quick Ratio

Abstract

Liquidity management is critical for a company's financial management and profitability. This study intends to analyze the effect of liquidity management on the functioning of 15 companies from the textile sector listed at the Pakistan Stock Exchange (PSE) for five years. The secondary data was obtained from the annual reports of these companies. Correlation and regression analysis were applied for data analysis. The results reveal that the current ratio and creditor payment period have a negative and considerable effect on the return on assets (ROA). In contrast, the quick ratio and inventory sales period positively correlate with profitability (ROA). Yet, the debtor collection period has a worse and exceptional impact on the firms' profitability. As a result, it is suggested that the textile industry in Pakistan should consider liquidity management as an important tool to increase profitability.

Author Biographies

Abdul Hameed, The Islamia University of Bahawalpur, Pakistan

Assistant Professor, Department of Management Sciences

Altaf Hussain, The Islamia University of Bahawalpur, Pakistan.

Assistant Professor, Department of Economics

Muhammad Yousuf Khan Marri, PARC National Agricultural Research Centre, Park Road, Islamabad, Pakistan.

.

Muhammad Azhar Bhatti, The Islamia University of Bahawalpur, Pakistan

Associate Lecturer

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Published

2021-09-30

How to Cite

Hameed, A., Hussain, A., Marri, M. Y. K., & Bhatti, M. A. (2021). Liquidity management and profitability of Textile sector of Pakistan. IRASD Journal of Management, 3(2), 97–104. https://doi.org/10.52131/jom.2021.0302.0029