The Relationship Between Working Capital Management and Financial Perfomance of Private Health Facilities in Mombasa County

Abstract

The study required to establish the relationship between working capital management and profitability of private health facilities of Mombasa County. The study was a cross-sectional casual study where a change in one variable has an effect on another variable. It was a census population but a target population of 10 private health facilities was chosen. Data was collected from secondary sources that is, audited financial statements for a period of 5 years between 2012 and 2016.Quantitative data technique was used to determine the degree to which the main study variables are related. Regression and correlation analysis was used to establish the actual relationship between the sets of study variables. The ANOVA technique was used in the study to establish the effect of the model at 5% significant level. The dependant variable was financial performance while the independent variable being working capital management practices. The relationship of average collection period, consumable material used and average payment period with operating profit margin was analyzed in this study. The study applied both regression analysis and correlation using SPSS for identify effects on those products of profitability. Intercept from the research was 0.222 from the years. Independent values researched explain a substantial 94% of financial sector development in Mombasa county as shown by the adjusted R square (0.94).Correlation analysis shows that the health facilities profitability was characterized with values connecting to working capital. Positive association exists within profitability, collection of average period and Consumable material used. Average period of payment shows an opposite association with profitability. Study summarized there exist an important relationship within the performance in finance and working capital. Thus increase in profitability is shown by increase in Accounts payable while decreasing with increase in accounts receivable. The study recommends that efforts should be made constantly to ensure the consumables being purchased at the facilities are being used effectively so as to reap maximum profit.