Abstract
Engineering sector plays a considerable role in Pakistan’s economy. The contribution of engineering industry to GDP is $2 billion and it provides employment to significant personnel. The engineering sector in a number of economies of the world, works as a major and speedy engine of economic growth. This study is an attempt to identify the factors affecting the earnings of engineering sector of Pakistan, by using the panel data of twenty-seven engineering firms listed on Karachi Stock Exchange (KSE) covering the period of 1990 to 2008. It is found that, in the long run Net Working Capital, and GDP growth has a positive impact on Earnings per Share and Operating Ratio, Net Fixed Assets and GDP deflator has a negative impact while Interest rate has not significant effect on earnings per share.