To Investigate the Effects of Working Capital Management on Corporate Profitability Among Firms Listed at Nairobi Securities Exchange
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Date
2013Author
Murega, Martin Thiuru
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
To overcome competition in a very complex environment, few companies have been able to
use the optimization of working capital as a real competitive advantage to leverage profit
motivated the study with the objective of identifying the variables that most affect
profitability through investigating the impact of working Capital Management on firms’
performance for non-financial institutions listed in Nairobi Securities Exchange (NSE) for the
seven year from 2005 to 2011. The profitability was measured in two different ways: return
on sales (ROS) and on asset (ROA). The independent variables used are cash conversion
cycle, days of accounts payable, day’s receivable and day’s inventory. The results were
obtained using Correlation Analysis for identifying the relationship between working capital
management and firms’ performance. Multiple linear regressions has identified that in terms
of ROS and ROTA are concerned, to manage working capital properly is relevant. From
ANOVA it is evident that days inventory has negative relationship with ROS and ROTA.
Days of accounts payable as the variable that influences ROS (positive relationship). These
results show that managing working capital properly is important. Moreover, managing
inventory as well as cash conversion cycle to an optimum level will yield more profit.
Citation
Degree in Master of Business AdministrationPublisher
University of Nairobi School of Business
Description
A Research Project Submitted in Partial Fulfillment of the
Requirements for the Degree of Master of Business
Administration