dc.description.abstract | Working capital management is a crucial element of corporate finance because it affects
the liquidity and profitability of a firm. Efficiency in Working Capital management is very
vital in management of all firms since it enables proper growth and expansion. A
descriptive research was done on the effect of working capital management on profitability
of institutions listed at NSE. Data entailing a five-year period (2014-2018) was collected
for 64 firms registered at NSE. The information was obtained from CMA, CBK, NSE and
firms under study websites. Multiple regression, correlation and descriptive analysis was
done. From the descriptive analysis, ROA displayed a mean annual average of 0.2267. The
mean cash conversion period is 118.3832 days, the average collection period mean is
184.7706 days, mean average payment period 245.891 days. On average, businesses are in
264.4687 days of inventory converting stocks to sales, the leverage level mean is 13.5025
and the growth mean is 10.376. R2 adjusted value was 0.616543, indicating that 61.6 per
cent of the changes in ROA are reflected by independent variable (CCC, ACP, APP,
Inventory turnover, Firm size, leverage and growth). Findings from Pearson's coefficient
of correlation represent a significant positive association amongst ROA and cash
conversion cycle (rho=0.773). A poor negative significant association between ROA and
ACP (rho=-0.463), the findings also showed that association between APP and return on
assets (rho=0.618) is strongly positive. The correlation amongst stock turnover and ROA
(rho=-0.652) was strongly positive. Therefore, there has been a noteworthy positive
association amongst firm size and ROA (rho=-0.216), there has been a significant positive
association amongst leverage and ROA (rho=-0.523). Eventually, there was a noteworthy
positive correlation amongst growth and return on assets (rho=0.013). The research
recommends an organization should increase their average collection period, inventory
turnover periods, leverage, size of the firm and cash conversion period so as to increase
their presentation. | en_US |