Impact of Firms Profitability measures on free cash flows: A case of

Pakistan Textile Industry

Maria Khushi
MS Student
Lahore Leads University
mariakhushi@ymail.com
00923114442800

Sajid Mohy Ul Din

PhD Student
Universiti Utara Malaysia
sajidmohyuldingsk@yahoo.com
 Abstract
This study is carried out to investigate the impact of firms profitability measures on the free-

cash-flow. To assess this, the population of Textile sector of Pakistan is used and by the

method of capitalization, a sample of 31 companies was taken from the three subsectors

(composite, spinning and weaving) of Pakistani Textile Sector. The Data is collected from

audited annual reports and from State Bank of Pakistans balance sheet analysis. Panel data

analysis techniques are used to study the relationship between dependent and independent

variables. The results reported a significant (p = 0.0007) and positive relationship between

overall profitability and free-cash-flow (FCF) of the firm. While as far as measures of

profitability are concerned, ROA and ROE are found to be positively and significantly related

with FCF whereas sales growth, size, and stock return although found to be significant but

negatively related with FCF.