Working capital management practices and financial performance of small and medium enterprises in Makindye Division: a case study of Nsambya Parish
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Date
2019-03
Authors
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Publisher
Kampala International University: College of Economics and Management
Abstract
The study was set to assess the effect of working capital management practices and financial performance of small and medium enterprises in Nsambya Parish, Makindye Division. Three specific objectives guided the study, that is; to determine the effect of accounts receivable management practices and financial performance on SMEs in Nsambya Parish, Makindye Division; to examine the effect of cash management practices and financial performance of SMEs in Nsambya Parish, Makindye Division. To establish the effect of inventory management practices and financial performance of SMEs in Nsambya Parish, Makindye Division; the study was guided by the trade-off theory by Modigliani and Miller (1963) and the goal theory by Etzioni (1964). A descriptive case study research design was used with a mixed approach using both quantitative and qualitative data. Total population was 345 from which a sample of 181 was derived using Krejcie and Morgan, (1970) table. Data was generated using questionnaire method, supplemented with interview, and documentary review. The Findings revealed that there was a moderate significant positive relationship between inventory management practices and financial performance of SMEs in Nsambya Parish, Makindye Division. Recommendations were: to improve in accounts receivable management by offering cash discounts to foreign customers to whom SMEs has not been offering discounts. To improve in accounts receivable management. The procurement manager may suggest to management a payment of higher premium prices for products as a trade-off with interest payment. For an effective cash management, it is recommended that the whole management team and the finance manager in particular need to enforce adherence to the cash policy put into place to guide and control cash management. To improve cash management and minimise cash constraints, the finance manager needs to match the timing of receipts from accounts receivables and payments of accounts payable. To boost inventory levels. In light of the competition faced, and the limited funds available to acquire inventory, the finance manager can advise management on sell of more shares to product farmers to raise more capital among others.
Description
A research report submitted to the College of Economics and Management in partial fulfillment of the requirements for the Award of a Bachelors Degree of Business Administration (Accounting and Finance) of Kampala International University
Keywords
Working capital management practices, Financial performance, Small and medium enterprises, Uganda