Impact of Cash Conversion Cycle on Profitability of Sugar Sector in Pakistan

The core purpose of research is to analyze the elements which influence the firms’ profitability. In order to conduct this research, firms of sugar sector in Pakistan were selected to evaluate the relationship between independent variables Net Income, Trade Receivable, Inventory, Trade Payable, Capital, Firm size and Financial Charges and firm's profitability. The research is a descriptive study and the researcher randomly selected 36 companies out of 81 companies at present, which is 44% of total population. Cash Conversion Cycle management is very important tool to manage liquidity position of any organization, this study attempts to study its impact on firm's’ profit by different statistical tests. Results found were that all the variables have significant impact on the profitability of the sugar industry of Pakistan. This research helped analyze the importance of efficient cash conversion cycle, the short receivable period, minimum inventory cost & long period to pay the short-term debt would improve profitability of the firm. The firm size also affect the profitability of the firm, big firms are more able to maintain their short term financing by their own capital. On the other hand, Cost of Goods sold & financial charges have negative impact on the profitability of sugar industry of Pakistan.