EVIDENCE FROM PAKISTAN'S NON-FINANCIAL SECTORS: A BEHAVIOR TESTING OF INVENTORY CONVERSION PERIOD AND FIRM PERFORMANCE

Abstract

The principal purpose of this study is to investigate the relationship between inventory performance and a firm’s performance. Research like this supports the theory that inventory performance influences business results. Data was retrieved from 102 manufacturing firms on the Pakistan Stock Exchange for 2017–2022. We analysed the panel data using E-Views from Virtual Spaces' statistical software, which includes procedures like regression, correlation, and OLS. The study outcomes revealed that all other variables are positively skewed except the Capital Intensity ratio. A shocking consequence establishes a negative connotation between inventory management and the firm's performance. Moreover, Leverage, Capital intensity ratio and net working capital also disclosed an adverse relationship with profitability. Inventory management has a positive link with Return on Equity. Return on Equity negatively correlated with Leverage and Assets Tangibility. It would be hard to overstate the importance of inventory management in financial management decisions. The administration must move carefully so that goods are not kept for too long unless necessary. Money can be better utilized by allowing it to earn interest or be invested in other ways rather than sitting idle. Researchers in emerging markets like Pakistan might use this study as a springboard to delve deeper into the basics of operations management.