Working capital efficiency: a comparison of cement and textile industries of Pakistan for the period 2001-2008. Working capital efficiency is measured using three index values, namely Performance Index (PI), Utilization Index (UI) and Efficiency Index (EI) . In the second part, EBIT is associated with the working capital variables, namely accounts receivable in days (AR), accounts payable in days (AP), inventory in days (Inv) and current ratio . Firm size (natural log sales) and debt ratio are used as control variables. This study is based on secondary data and the number of observations is 400. The data sources are State Bank of Pakistan and annual reports of companies. Data analysis methods consist of regression analysis and indices. The main finding of the study is that the working capital management of the cement industry is better than that of the textile industry. There is wide variation in how companies manage working capital efficiency. Regression analysis shows that there is a positive relationship between current ratio and EBIT. EBIT showed a significant negative relationship with accounts payable in days and accounts receivable in days, while a significantly negative relationship with inventory in days. EBIT showed a significant positive relationship with firm size but an insignificant negative relationship with gearing. While EAT showed a significant negative relationship. The cement industry earns more EBIT through strict credit control to customers, making advance payments on accounts payable and reducing their inventory within days. Larger companies with less debt also make more profits.I. IntroductionFinance books mainly focus on the study of long-term financial decisions. Worki...... middle of article ......rmance: An analysis of Mauritian small manufacturing companies'. International Journal of Business Research Papers, Vo.2 No. 2. Pp. 45 -58 Raheman, A., and M. Nasr. 2007. Working capital management and profitability: the case of Pakistani companies. International Journal of Business Research 3 (2): 275-96. Shipping costs, manufacturing exports and economic growth. Radelet S and Sach J (1998). Shin H and L Soenen (1998). Working capital efficiency and profitability of the company. Financial Practice and Education 8:37-45. Vishnani, S and Shah, B.K. (2007). “Impact of working capital management policies on firm performance: an empirical study” Global Business Review; 8(2) pp 267,281Weinraub HJ and S Visscher (1998). Industry practice of conservative aggressive working capital policies. Financial and strategic decision journal 11(2): 11-18.

Essay / Working capital efficiency: a comparison of cement and textile industries of Pakistan for the period 2001-2008. Working capital efficiency is measured using three index values, namely Performance Index (PI), Utilization Index (UI) and Efficiency Index (EI) . In the second part, EBIT is associated with the working capital variables, namely accounts receivable in days (AR), accounts payable in days (AP), inventory in days (Inv) and current ratio . Firm size (natural log sales) and debt ratio are used as control variables. This study is based on secondary data and the number of observations is 400. The data sources are State Bank of Pakistan and annual reports of companies. Data analysis methods consist of regression analysis and indices. The main finding of the study is that the working capital management of the cement industry is better than that of the textile industry. There is wide variation in how companies manage working capital efficiency. Regression analysis shows that there is a positive relationship between current ratio and EBIT. EBIT showed a significant negative relationship with accounts payable in days and accounts receivable in days, while a significantly negative relationship with inventory in days. EBIT showed a significant positive relationship with firm size but an insignificant negative relationship with gearing. While EAT showed a significant negative relationship. The cement industry earns more EBIT through strict credit control to customers, making advance payments on accounts payable and reducing their inventory within days. Larger companies with less debt also make more profits.I. IntroductionFinance books mainly focus on the study of long-term financial decisions. Worki...... middle of article ......rmance: An analysis of Mauritian small manufacturing companies'. International Journal of Business Research Papers, Vo.2 No. 2. Pp. 45 -58 Raheman, A., and M. Nasr. 2007. Working capital management and profitability: the case of Pakistani companies. International Journal of Business Research 3 (2): 275-96. Shipping costs, manufacturing exports and economic growth. Radelet S and Sach J (1998). Shin H and L Soenen (1998). Working capital efficiency and profitability of the company. Financial Practice and Education 8:37-45. Vishnani, S and Shah, B.K. (2007). “Impact of working capital management policies on firm performance: an empirical study” Global Business Review; 8(2) pp 267,281Weinraub HJ and S Visscher (1998). Industry practice of conservative aggressive working capital policies. Financial and strategic decision journal 11(2): 11-18.

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