outline of the bba project on fertilizer industry pakistan

8/9/2019 outline of the BBA project on fertilizer industry pakistan

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IMPACT OF WORKING CAPITAL MANAGEMENT ON

PROFITABILITY: CASE OF THE AGRICULTURAL SECTOR

OF PAKISTAN

SUPERVIOR:

Ms. IRUM BUTT

SUBMITTED BY:

ALINA SAJID

SESSION: (2011201!"

KINNAIRD COLLEGE FOR WOMEN


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I#$%&')$*:

The major function of any financial department is to manage the short and long term liability

and assets of the organization. As we are conducting the research on Pakistan’s agriculture

industry, we have selected si fertilizer manufacturing companies of Pakistan. According to

!uhammad !ursheed ur "ehman. #$%&&' there is the positive correlation between the working

capital and profitability, and same with the li(uidity. )or the purpose of research we will be

taking ***, "+, "+A and other working capital ratio for measuring the effectiveness of the

organization. -orking capital management is the most important factor for improving

profitability and efficiency uchdev singh, #$%&/'. 0y reducing the cash conversion cycle

organization can improve their profitability Parul mehra, #$%&/'.

According to 1rishna !oorthy, !r. 2g *hee 3ew and !r !ahendra 1umar. #$%&&' there is the

positive relation between the inventory management and profitability of the organization. There

research shows clear evidence that hold cost of goods in store or at the shelf of retailer is the cost

to the firm which ultimately reduce the profitability of the organization. 4r Ashok 1umar

Panigrahi. #$%&/' states that the inventory management is the most ulterior task in achieving the

efficient working capital they have conducted the study on ndian top&% cement industries they

took ten year data from $%%& to $%&%. The results show that the inventory management had

positive relation with the organization working capital.

The profitability is the major element for any profit making organization, keeping in mind the

other goals of the firm like providing the high (uality products, lowering cost of manufacturing

and etc. the analysis that we are about to conduct is mainly focuses on the financial department

of the selected organization. This study that we are conduct is previously conducted in

0angladesh’s cement industry to find out the relation between the working capital management

and the profitability. -e are trying to apply that study on to the agricultural organization to find

out whether there is any relation between the two elements in Pakistan agric industry or not, for

that we will apply profitability analysis on the selected organizations and other statistic

techni(ues to find out the relation between the variables. This study will help to improve the

financial position of the organizations in Pakistan. As agriculture is the backbone of Pakistan

economy and yet there is no major steps been taken to improve the financial position of the


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organization with in the agriculture industry. t’s our little try to find out the path to improve the

organizations position working the agriculture industry.

R+$*+,- & $/- s$':

The purpose of this research is to analyze the impact of working capital on the profitability of the

organization. This will help the organizations to develop and implement the policies that will

help to improve the performance of the organization in terms of profitability.

S)&- & $/- s$':

The study is going to add help the future researchers as the assistance, as their was no research

being done on this industries regarding the management of working capital to attain maimum

profits. The study will also help the fertilizers manufacturers to improve their profitability by

adapting the recommendation. t will not only serve the fertilizer sector rather it will also help

the private sector along with the general public and private sector to improve their policies

regarding the working capital management.

P%&,-3 I'-#$**)+$*:

After having the in depth analysis of the fertilizer industry of Pakistan the problem identified is,

the organizations which are not maintaining their working capital management system well

enough are facing the problem of low profitability. n this time of high competition the

organization who have failed to maintain the proper working capital variables are facing the low

profits.

P%&,-3 S$+$-3-#$:

mpact of working capital management on organizations profitability.


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R-s-+%)/ &4-)$*5-s:

• To eamine the effect of inventory turnover on the profitability.

• To eamine the effect of cash conversion cycle on the profitability.

• To eamine the effect of payable turnover on the profitability.

• To eamine the effect of account receivable on the profitability.

H&$/-s*s:

&' 5&6 there is relationship between inventory turnover and profitability.

5%6 there is no relationship between inventory turnover and profitability.

$' 5&6 there is relationship between payable turnover and profitability.

5%6 there is no relationship between payable turnover and profitability.

/' 5&6 there is relationship between cash conversion cycle and profitability.

5%6 there is no relationship between cash conversion cycle and profitability.

7' 5&6 there is relationship between accounts payable and profitability.

5%6 there is no relationship between account payable and profitability.


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4

I#'--#'-#$ 5+%*+,-s D--#'-#$ 5+%*+,-

Working Capital

Management


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L*$-%+$%- R-5*-6:

n Pakistan researchers have conducted several researches on working capital and li(uidity

relationship will profitability for this purpose we have selected same to variable but for the

agriculture industry. As Pakistan is consider to be the as agricultural economy and this sector

accounts for 8%9 of the Pakistan’s employment rate.

The research of !uhammad !ursheed ur "ehman. #$%&&' have then the study on tetile industry

of 0angladesh for that they have selected : tetiles company and have conduct multiple test on

them. They have conductive ratio analysis regression model and correlation model on three year

financial data of the selected organization from year $%%; 4ollars. )or this kind of industry organization should be highly li(uid to invest on

"=4. for this research they have used two different type of the analysis tools, P = ?relt

oftware. The conclusion that was found after the research was that Average payback period,

4ebt and *** have negative relation with the profitability, in order to maintain high profitability


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they have to keep the *urrent assets higher than the current liabilities. o it was concluded that

pharmaceutical industry can achieve high profits if they don’t use debts.

4r Ashok 1umar Panigrahi. #$%&/',the study shows the positive impact of inventory

management on the working capital of the organizations the research was conducted on the top

&% cement industry of ndia. The tests were applied on &% years data from $%%& to $%&% the data

was obtained from secondary resources.the dependent variable was gross operating profit #?+P'

and the independent variable was inventory management. The financial tests and regression test,

test were applied on the data to obtain the results.

1rishna !oorthy, !r. 2g *hee 3ew and !r !ahendra 1umar. #$%&&' the study was conducted

on the secondary data collected from various sources online and from library. The time period of

the analysis was from $%%8 to $%&%. There is the positive relation between the inventory

management and profitability of the organization. There research shows clear evidence that hold

cost of goods in store or at the shelf of retailer is the cost to the firm which ultimately reduce the

profitability of the organizations.

R-s-+%)/ M-$/&'s :

P&,+$*:

The fertilizer manufacturer importer and distributer will all lie in the population of research.

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The si major fertilizer manufacturer companies will be the target population of the study.

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The "egression techni(ue that has been used to gather the relevant data.

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"esearcher will be taking the 8%9 of the total population as the sample size for the survey. The

total number of registered fertilizer companies is eight out of which we will be taking si out of

them for the survey.

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"esearcher will be using the simple random sampling for this research.

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"egression model will be used to analyze the gathered data, using graphs and fre(uency tables.

nferential statistics is used for hypothesis testing. Profitability and li(uidity ratios will be

applied on the organization last five year financial performance to get the right idea of the

relationship between the variables

A#+,s*s $&&,s:

P &@.% will be used to analyze the data.

R--%-#)-s:

&' !ohammad !orshedur "ahman. #$%&&' -orking *apital !anagement and Profitability6A tudy on Tetiles ndustry. AA >niversity "eview, ol. ; 2o. &

$' 5arsh ineet 1aur and ukhdev ingh. #$%&/' !anaging Bfficiency and ProfitabilityThrough -orking *apital6 an Bmpirical Analysis of 0B $%% *ompanies Asian Cournal

of 0usiness !anagement ;#$'6 &:@B /, 2 2+6 $/&:

outline of the bba project on fertilizer industry pakistan

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