3.3 Hypothesis Testing The objective of this study is to examine the relationship between profitability and working capital management, the study uses the same hypotheses used by Raheman & Nasr (2007) Hypothesis 1Hypothesis 1 The first hypothesis of this study is the following:H01: There is no relationship between efficient management of working capital and company profitability.H11: There is a relationship between efficient management of working capital and company profitability.Hypothesis 2The second hypothesis of the study is as follows.H02: There is no relationship between liquidity, size and profitability of firms.H12: There may be a negative relationship between liquidity, size of Pakistani firms and profitability.3.4 Model Specifications: The model used in the study is similar to the one used by Raheman & Nasr (2007) which can be specified as;NOP it = β0 + β1 (ACP it) + β2 (ITID it) + β3 (APP it) + β4 (CCC it) + β5 (CR it) + β6 (DR it) +Β7 (LOS it) + β8 (FATA it) + ε (Eq. 3.2) Where:NOP: Net Operating ProfitabilityACP: Average Collection PeriodITID: Inventory Turnover in DaysAPP: Average Payment PeriodCCC: Cash Conversion CycleCR: Current RatioDR: Debt RatioLOS: Natural Logarithm of SalesFATA: Financial Assets to Total AssetsE: The error term. 4. Results and discussion Two types of analysis are used, descriptive and quantitative. The results of these analyzes are discussed in this section 4.1 Descriptive Analysis Descriptive analysis is the first step in the analysis; will help describe the relevant aspects of the occurrence of the cash conversion cycle and provide detailed information on each relevant variable. Research has already been conducted in this area of ​​study and...... half of the paper ...... has a negative coefficient – ​​0.2237. But it is significant at ά. = 5%. This means that if the business is able to reduce this period of time known as the cash conversion cycle, it can increase its profitability. Analyzing the results it is concluded that if the company is able to reduce these time periods, then the company is efficient in managing working capital. This efficiency will lead to increasing its profitability. The current ratio is a traditional measure to monitor the liquidity of the enterprise. In this analysis the current ratio has a significant negative relationship with profitability (measured by net operating profitability). The coefficient is – 0.1357. The result is significant in ά. = 1%. This indicates that the two objectives of liquidity and profitability have inverse relationships. Therefore, Pakistani companies need to maintain a balance or compromise between these two measures.