The effect of working capital management and profitability of retail stores in Migori county,Kenya

Abstract

Working capital management is said to be one of the most important factors for firms’ growth in terms of assets and profitability. It is considered to be one of the platforms that provide firms with the competitive edge. This study tries to establish the relationship between working capital management and profitability of retail stores in Migori county, republic of Kenya. Data was collected from a sample of retail stores, whose financial statements were provided by their managers or owners. The data from the financial statements were presented and analyzed in relation to the objective of the study. The study shows that there is indeed significant relationship between working capital management and profitability of retail stores in Migori County. The findings also show that different components of working capital management have either negative or positive relationship with Return on Assets (ROA) which was used as a measure of profitability.