METHODOLOGY type of activity. For example, we

METHODOLOGY
A database was constructed from a selection of about 50 financial reports that were made public by companies in Pakistan listed on the stock exchange between January 1, 2009 and December 31, 2009. The selection is based on a randomization sample of manufacturing companies. The approximately 50 financial reports announced by the public companies between the January 1, 2009 and December 31, 2009, just 10 financial reports were usable and selected for our research data and the analyzed. In this research study, these variables are used for empirical results. The study applied a co-relation and non-experimental research design
Data Collection
For the purposes of this research, some industries have been omitted due to the type of activity. For example, we have omitted all companies from the service industry. In addition, some of the signatures are not included in the data due to lack of information for the specified time. We will not consent to participation in activities of finality of activity in favor of charity. Therefore, we subtracted financial activity from total assets. All companies listed and registered by KSE, Pakistan.
RESULTS AND DISCUSSION
The results of the data are provided in the descriptive statistics and in the regression analysis as follows.

Descriptive Statistics
Table 2 provides descriptive statistics of the variables collected. All variables are calculated according to the balance sheet values (book). The book value was used because the companies did not provide market value regarding the variables used in this study. Furthermore, measurement of profitability can only be based on the values of the income statement, not on the so-called market values. This is rather arbitrary. Hence we relied on the ‘book values’ as of the date of financial reports. Total observations come to the 10 x 1 = 10. The credit period that granted by companies to their clients ranged at 35.3 days while they paid their creditors in 90.5 days on average ratio. Inventory took on the average 77.50 days to be sold. Overall the average cash conversion the cycle ranged at 22.28 days.
The average size firm measured by the logarithm of the sales came to 6.41 million, and companies included in our sample had an average of the 30% gross operating profit. The average financial debt ratio has increased to 32 percent and the fixed financial ratio increased to 4 percent.
Descriptive Statistics (N = 264)
Minimum Maximum Mean Std. Deviation
AR 11.60 126.88 53.48 19.98
AP 7.32 258.54 49.50 33.03
INV 13.02 304.62 78.63 47.46
CCC 13.38 301.34 89.94 50.75
LnS 3.87 8.89 6.41 0.83
FD 0.02 0.73 0.32 0.17
FA 0.00 0.18 0.04 0.04
Profit 0.01 0.89 0.30 0.18

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Regression Analysis
In this section we provide the empirical results on the relationship between working capital management and the profitability of American manufacturing companies. We have used the weighted least squares model with the diameter of five sectors (health production, industrial products, production of chemicals, energy production and food production). When we use the polished data and the cross section, there may be a problem of heteroskedasticity (variation of variations after a short period of time) 2, p. 292). To overcome this problem, we used the most common square with cross-section weights. In this regression, the common section is calculated for all the variables and weighted, respectively.

R2 = 0.373; S.E.E. = 0.085; F = 4.767 Regression Equation (A): Gross Operating Profit = 0.480 – 0.003 AR + 0.019 LnS – 0.442 FD – 1.113 FA
BETA
constant 0.480 0.257 1.869 0.071
AR -0.003 0.001 -0.396 -2.349 0.025 0.688 1.453
LnS 0.019 0.028 0.111 0.684 0.499 0.749 1.335
FD -0.442 0.135 -0.588 -3.281 0.003 0.610 1.640
FA -1.113 0.587 -0.319 0.067 0.067 0.649 1.441

The results of regression equation “A” indicate that the coefficient of accounts receivable is negative; That is, the increase or decrease in the average collection period will significantly affect the profitability of the company.
We used the financial debt ratio as proxy for leverage; It shows a significant negative relationship with dependent variable. Which will adversely affect its profitability.
DISCUSSION
In this research paper, we take working capital as an independent variable and net operating profit as a dependent variable. We found the significant negative correlation between the net operating profitability and the average collection period. The turnover of stocks in days, the average payment period and the cash conversion cycle for a sample of Pakistani companies listed on the stock exchange. Karachi. Previous theoretical research involves a negative relationship between the cash conversion cycle and company profitability. The regression results indicate that the debtor’s coefficient is negative; that is, the increase or decrease in the average funding period will significantly affect the company’s productivity. It thus appears that operating profitability determines the manner in which managers function in the management of trade debtors. The results of this document indicate that managers can create value for their shareholders by reducing the number of days for trade debtors. Furthermore, the negative credit-to-business ratio indicates that less profitable businesses receive a decrease in debtors in an attempt to shrink their cash gap in the cash transfer cycle. This is all based on the results of this article; we close that success can be enhanced if companies manage their working capital competently.
CONCLUSION
The donation of manufacturing division, the second largest sector of economy, plays a important role in Pakistan’s economic enlargement. Most of Pakistani companies have big amounts of cash invest in working capital. It can be predictable to be a significant crash on the profitability of the companies said. The net productive of a signature. On the basis of the psychoanalysis of can additional he concludes that he / she has been equipped on the working capital. Organization of working capital means “management of current assets and current liability”. If these companies appropriately manage their cash, accounts receivables and inventory in a proper way, this will ultimately increase the success of these companies.
References
1 A, E. (2004). Liquidity-profitability trade off: an experiential investigation in an up-and-coming market. International periodical of Commerce and Managing, , 14, 48-61.
2 Afza, T. a. (2008).Working Capital Approaches and Firm’s Returns. Pakistan periodical of Commerce and Social Sciences 1.0(1.0), 25-36
file:///F:/The_Relationship_between_Working_Capital_Managemen.pdf file:///F:/TheRelationshipBetweenWorkingCapitalManagementandProfitab.pdf
11 Mathuva D, 2009. The power of working capital management mechanism on corporate profitability: a study on Kenyan listed firms. Explore Journal of Business Management, 3: 1-11

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