Firms can use working capital management which is one of the essential determinants to influence their profitability. The main theme of present study is to investigate the relationship between working capital management and profitability of Tobacco Industry of Pakistan. This study is based on secondary data collected from financial statements of selected companies of Tobacco Industry of Pakistan for the period of 2005-2014. For data analysis, both descriptive and inferential statistics were used. Correlation analysis is used to check the relationship between the variables, while multiple regression analysis is used to examine the effects of working capital management on profitability of firms. The result reveals that there is a strong negative relationship between variables of working capital management and profitability of Tobacco Industry of Pakistan. This means that as the cash conversion cycle increases, it will lead to declining of firm profitability and managers can create a positive value for shareholders by reducing the cash conversion cycle at optimal level. The study concludes that managers can create value for shareholders by managing the working capital well designed and implemented, and by keeping each components of it at optimal level.

1. Introduction
2. Literature Review
3. Research Methodology
4. Data Analysis and Results
5. Conclusions and Recommendations
References

• Hussain Muhammad(Department of Management Sciences, Hazara University Mansehra, Pakistan) First Author, Corresponding Author
• Ashfaq U. Rehman(Department of Political Science, University of Peshawar, Pakistan)
• Muhammad Waqas(Lahore School of Accountancy and Finance, University of Lahore Islamabad Campus, Pakistan)