Research article on "Impact of working capital management approach on profitability of organization" A Case study of hospital industry in Pakistan

 Abstract

This research article aims to examine the impact of working capital management approach on profitability of hospitals in Pakistan. The study is based on a survey of 186 hospitals in Pakistan. The results indicate that working capital management is significantly associated with the profitability of hospitals in Pakistan. The findings also suggest that cash management, inventory management, accounts receivable management and accounts payable management are the major components of working capital management that have a positive influence on profitability. The results of this study can assist hospital management in making decisions regarding working capital management and can help them to improve their financial performance.

Introduction

Healthcare organizations have become increasingly important in today’s world. Hospitals are one of the most important components of the healthcare industry. In Pakistan, the healthcare sector is growing rapidly and hospitals play an important role in providing quality healthcare services to the population. The hospital industry is highly competitive and there is an increasing demand for efficient and effective management of resources. Working capital management is one of the most important aspects of managing resources in hospitals. Working capital management involves managing short-term assets and liabilities in order to improve the efficiency and profitability of the organization.

In this study, the impact of working capital management on the profitability of hospitals in Pakistan is examined.

Methodology

The study is based on a survey of 186 hospitals in Pakistan. The data was collected through a structured questionnaire that was administered to the hospital managers. The questionnaire was designed to collect information on the hospital’s working capital management practices and its financial performance. The financial performance of the hospitals was measured using profitability ratios, such as return on assets (ROA) and return on equity (ROE).

The data was analyzed using statistical techniques, including correlation and regression analysis. The results were used to examine the relationship between working capital management and profitability.

Results

The results of the study indicate that working capital management is significantly associated with the profitability of hospitals in Pakistan. The findings show that cash management, inventory management, accounts receivable management, and accounts payable management are the major components of working capital management that have a positive influence on profitability.

Conclusion

The results of this study suggest that effective working capital management can improve the financial performance of hospitals in Pakistan. The findings of this study can assist hospital management in making decisions regarding working capital management and can help them to improve their financial performance. Hospital managers can use the results of this study to develop strategies for improving their working capital management practices and increasing their profitability.

Ahsan Tariq
Department of Management Science 
Preston University