Strategic Threads: Exploring the Interplay between Working Capital Strategies and Financial Performance

Abstract

Working capital management (WCM) helps organizations with consuming resources, helping organizations with keeping up sufficient cash flow to meet short-term targets and duties. However, companies related to the textile sector of Pakistan are facing the problem of WCM. Despite the improvement in WCM, the companies are facing challenges. The current study examined the role of WCM in financial performance of Pakistani textile companies. Population of the study is SMEs of Pakistan. Questionnaires were used for data collection. To apply cluster sampling, area is divided into provinces, after that the study selected few clusters randomly and the data was collected randomly from all the selected clusters. Smart PLS was used for data analysis. It is found that working capital policy and working capital managing overall has a positive role in enhancing financial performance. Furthermore, controlling the environment plays a moderating role in enhancing financial performance.