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Title Inventory and Operational Accruals Management for Firm Profitability

Author(s) Sajid Yaqoob

Abstract This research study is intended to explore the relationship between inventory and operational accruals management and profitability of the Pakistani Manufacturing Firms listed on the Pakistan Stock Exchange (PSX). The reason is to ascertain how efficient control of the Inventory turnover period, account collection period, account payable period, and cash conversion period impacts the profitability of firms i.e. Return on Assets, Return on Equity, and Operating Profit Margin. The methodology entails the use of a robust quantitative analysis of financial data of a sample of 100 manufacturing firms for the period between 2014 and 2023. A longer Inventory Turnover Period negatively affects ROA, ROE, and OPM. The negative impact is statistically significant for all metrics, indicating that an extended period for inventory turnover is associated with lower profitability and efficiency. The negative coefficients for the constant term suggest a baseline level of loss or deficit prior to the influence of other variables. The statistical significance of these constants across all models indicates a robust and consistent baseline impact on each financial metric. The implications of the study may help practitioners and policymakers to improve financial performance by better managing the inventory and production processes. Possible future research themes are outlined, comprising cross-sectoral studies, the impact of technological growth, and the effects of other macroeconomic factors, to expand the knowledge of this relationship. This study, therefore, contributes to the broader understanding of how inventory and operational management practices influence the financial health and performance of manufacturing firms, providing valuable insights for stakeholders in the industry.

Type Thesis/Dissertation MS

Faculty Management Sciences

Department Management Sciences

Language English

Publication Date 2025-05-06

Subject Finance

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