Impact of Cash Conversion Cycle On Profitability: An Analysis of FMCG Sector of Pakistan

This thesis investigates the impact of the cash conversion cycle (CCC) on the profitability of Fast-Moving Consumer Goods (FMCG) companies in Pakistan. The study categorizes firms into small, medium, and large based on their asset size to ensure an unbiased analysis. Using panel data from 14 companies between 2008 and 2017, the research employs a panel regression model. Profitability, the dependent variable, is measured by Return on Assets (ROA), while the independent variables include the cash conversion cycle and its components: average inventory period, average receivable period, and average payable period.<br>The findings indicate that for small firms, neither the CCC nor its components have a significant impact on profitability. In medium-sized firms, only the CCC shows a significant and inverse relationship with profit. For large FMCG firms, both the average inventory period and the CCC have a negative and significant impact on profitability.