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siness. Both the returns on investment in current assets and fixed assets are to be considered. Since the return on total capital employed turns out to be lesser than the return on fixed assets, investment in current assets must be done very cautiously maintaining a minimum of liquidity. He further establishes that if the CCC turnover days are increased, the minimum liquidity required increases; and conversely, if the CCC turnover decreases, there also occurs a fall in the volume of cash needed by the business.

In Pakistan's context Raheman and Nasr, (2007) analyzed the effect of WCM componenets on liquidity and profitability by selecting a sample of 94 Pakistani firms listed on Karachi Stock Exchange for a period of 6 years from 1999 - 2004. They reported a significantly negative correlation between WCM components and profitability, and between liquidity and profitability.

Afza and Nazir (2009) studied relationship between WCM policies and a firm's profitability by taking 204 non-financial companies listed on Karachi Stock Exchange (KSE) for the time span of 1998-2005. They used regression analysis and found a strong positive association of low profitability and aggressive WCM and recommended a conservative approach towards WCM and related financing policies.

Noreen, Khan and Abbas, (2009) examined the international WCM of MNCs in Pakistan. They studied three major areas namely the international cash management operations, international sales and foreign exchange activities of one hundred and fifty companies of the banking, telecommunication, and related service providers. Their is study is envisaged to be helpful to the policy makers and decision making authorities to better consider and adopt efficient ways of WCM practices.

4. Research Methodology

This is basically a study which envisage the analysis through correlation analysis and One-Way ANOVA Testing. The correlation analysis is to be used for seeking the exact relationships among the CCC length, profitability and the firm's size. The One-Way ANOVA Testing is to be used for analyzing any of the differences across the industries studied in terms of the CCC turnover days.

Hypotheses

Since the aim of the study is to examine the relationship of the cash conversion cycle with the firm size and profitability so following hypothesis have been developed for empirical test.

H01: There is no relationship between cash conversion cycle and firm size.

H11: There exists a relationship between cash conversion cycle and the firm size.

H02: There is no relationship between cash conversion cycle and profitability.

H12: There is exists a relationship between CCC and profitability of the firm.

The Study Design-Methods and Procedures

Sampling

The sample contains four industries (i.e. cement, food, sugar and auto-mobiles) and ten companies are randomly taken from each industry. The data used for analysis is for the period 2006 to 2010. Service firms are considered beyond the scope of this study and thus not sampled. For the purpose of the study, firm size is measured by total assets and sales revenue, and profitability is measured by return on assets and return on equity.

Data Collection

The data o