Nexus Between Firm Performance and Cash Conversion Cycle: Evidence from Pakistan

Abstract

The purpose of the research is to investigate the impact of cash conversion cycle on the performance of the Pakistani textile listed firms. In this study, the data of 80 firms between the years 2011 and 2020 were utilized and amounted to 800 observations. Findings show that the effect of cash conversion cycle on the return on assets are negative and significant. There are also regression findings which provide that cash conversion cycle has negative but non-significant impact on performance earnings per share. This imply that companies associated with textile industry of Pakistan, are required to reduce the cash conversion cycle to improve the company performance. This research makes theoretical contributions that reduce the length of cash conversion cycle, enhance the performance of the firm which was associated with the effective working capital management. Based on control variables, asset turnover has positive and debt ratio has negative and significant influence on the earnings per share and return on assets. This study finding can be applied by policy makers and investors in decision making