Working capital management and performance of business firms in Rwanda: a case of Sulfor Rwanda industries.
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Date
2011-09
Authors
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Journal ISSN
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Publisher
Kampala International University, College of Economics and Management
Abstract
The study focused on the working capital management and performance of business firms in
Rwanda taking Sulforwanda industries as the case study. The objectives of the study were to
examine the impact of receivables, payable and inventories conversion on the performance of
Sulforwanda industries, to establish the level of performance of Sulforwanda industries,
evaluate working capital management policies of Sulforwanda industries and its impact on
the firm's performance.
The research reviewed the existing literature related to the study. In the structure to achieve
the study objectives, both primary and secondary data were collected. Study adopted
qualitative approach. Both random and purposive sampling techniques were used to obtain a
sample of 250 respondents from a total population of 665 employees of Sulforwanda using
Slovin's technique of sample computation.
The study revealed that working capital management conversion has great impact on firm's
performance, the analysis of the performance of Sulforwanda revealed that it at low level.
The analysis of the liquidity ratios showed that firm has no sufficient liquidity to finance its
short term obligations, the study noted that the firm depends on external sources of funds, the
study also indicated that firm doesn't have policies and ·procedures related to the
management of account receivables, payables and inventory that would enable the firm to
improve its performance. The study further revealed that there is a strong relation between
working capital management and firm's performance as evidenced by 100% of the
respondents.
To improve working capital management, the study recommended Sulforwanda industries
should establish appropriate policies pertaining to the management of payables, payables and
inventory and where necessary revise them to match it with the changing business
environment. The management should adopt appropriate methods related to inventory
management in order to avoid stock runs out or idle stock. The management should also
always monitor the cash inflows to avoid surplus cash or cash deficit and improve
performance by investing the returns.
Finally, the study suggested areas for further research.
Description
A dissertation submitted to the School of Postgraduate Studies and Research in partial fulfillment of the requirements for the Award of the Degree of Master of Business Administration in Finance and Banking of Kampala International University
Keywords
Capital management, Business firms