The Influence of Liquidity and Leverage on Profitability: An Evidence from Textile Industry of Pakistan

Abstract

The textile business in Pakistan has built exceptional development over the years witnessed by exports of US$21 billion for FY22. Pakistan is the 8th major exporter of textile goods in Asia. The study tried to determine the relationship between the financial leverage and liquidity ratio with the profitability of the textile industry. A sample of 75 listed textile companies was taken for the duration of 2016 to 2020. Panel data analysis was carried out through fixed and random effect models after selection through different methods. The Panel regression showed that there exists a positive significant relationship between liquidity and return on assets. This implies that working capital requirements and liquidity issues fittingly can get significant yields on applied resources and return on assets. Findings also suggest that the asset turnover ratio has a significant relationship with return on equity. Leverage also has a significant relationship with return on equity but the relationship is inverse. This implies that the companies with higher obligations and influence have greater exposure to risk and are not fit to generate good returns.

Determinants of technical efficiency of smallholder farmers’ bread wheat production and implications of seed recycling: A stochastic frontier approach

“…The positive contribution of seed rates on production and technical efficiency was attributed to the quality and quantity of the seeds. 7,52,61 The insignificant contribution of seed rate in this study may therefore be explained by the inferior quality of the seeds and the seed recycling practices in the surveyed areas. Weeds remain a major challenge to increasing crop output as they compete with the crop plants for light, nutrients, and water.…”

“…Studies have also shown that poor farmers will not invest even on the cheapest farm innovations as they do have urgent consumption demand. 12,14,51,52 Second, farmers closer to the poverty line do not have the incentive to try new innovations as risks of innovation failure will put them below the poverty line. This could be another explanation for the highly significant impact of capital investment in BWP.…”