Navigating Financial Seas: The Influence of Working Capital Dynamics on SME Textile Sector Performance in Pakistan, Enhanced by Moderating Control Environments

Abstract

Working capital (WC) is an essential asset to meet the daily working charges, therefore, an appropriate method of WC is a key to guarantee a strong soundness of financial position for the organization. However, Pakistan textile Small and Medium Enterprises (SMEs) are struggling to implement suitable WC management leading to negative effect on financial performance. To address this issue, this study considered the role of WC management in the financial position of SMEs. Data were collected from textile SMEs in Pakistan and analyzed by using Smart PLS 3. It is observed that WC management has a positive role in the promotion of financial performance. The present study has advanced several practical identifications in connection with WC and relevant management practices in cloth and garments textile sector of SMEs Punjab, Pakistan.