Cash conversion, cycle drifts on the financial performance of food and personal care product companies listed at Pakistan stock exchange (PSX)

Abstract

Study is done to imprisonment the impact of cash conversion cycle (CCC) on the financial
performance of the sector “Food and Personal Care Product” which is listed on Pakistan Stock
Exchange. The effect of lathe 1st five years’ performances are captured from 2011-15. The
sector comprises of companies but five-year complete data is available for only 14 companies.
Panel data analysis is used to determine the results. Eight hypotheses were redeveloped and
tested to examine the liquidity position concerning financial performance. Out of four
hypotheses related to the dependent variable ROA, one is accepted. The AAP hypothesis
showed the same result as this was modeled while AAR, and AI hypotheses are rejected. Again
CCC tested with ROA to reconfirm the results of the regression model but the null hypothesis
is accepted. Out of four hypotheses related to the dependent variable, ROE two are accepted.
The hypothesis of AAR and AI are rejected. While the other two hypotheses related to AAP
and CCC are accepted. It is reconfirmed by comparing CCC with the ROE which accepts the
alternative hypothesis. The result gave a clear picture about liquidity (CCC) impact which has
a negative relationship with the company’s performances if the dependent variable is ROE.