A Current Asset Management as the driver of financial efficiency in Textile Industry of Pakistan

Abstract

The study aimed to explore the significance of the relationship between current asset management, and financial efficiency in the textile sector of Pakistan. Financial data were collected for 50 textile companies for the year 2001 to 2017. The researchers analyzed the study using panel-data estimation techniques like the fixed as well as the random-effect after applying the Hausman-test, and LM-test. Fisher type panel unit root test was also applied. The empirical results of the study indicate that current asset ratio as the measure of current asset management is a highly negatively significant driver of financial efficiency in the textile sector of Pakistan. Also, the controlling factors like leverage, and tangibility are significant factors of financial efficiency. The policymakers, and management of the companies in the textile sector of Pakistan should carefully consider current asset ratio for deciding on enhancing the financial efficiency of their firm as current asset ratio decreases financial efficiency in this sector. They should take careful decision in their current asset management practices.