AN APPRAISAL OF THE ROLE OF WORKING CAPITAL MANAGEMENT ON ORGANISATIONAL PERFORMANCE
Figures and abstract
1 The Impact of Working Capital Management on the Performance of Nairobi Securities Exchange-listed Firms Cyprian Nyarige Nyamweno, Department of Economics, Finance, and Accountancy, School of Business, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya E-mail address: [email protected] Tobias Olweny is a lecturer in the School of Business at Jomo Kenyatta University of Agriculture and Technology. His email address is [email protected].
ABSTRACT The purpose of this study was to determine the impact of working capital management on the performance of firms listed on Kenya’s Nairobi Securities Exchange. From 2003 to 2012, a sample of 27 publicly traded companies was used. A Robust GMM was used in the study to estimate Arellano-Bover/Blundell-Bond linear dynamic panel data.
The findings revealed that days of accounts receivable and cash conversion cycle have an indirect effect on gross operating profit performance. Accounts payable days and inventory days have a significant and direct impact on performance.
Inflation and size were discovered to have an indirect and direct effect on performance. Although insignificant, they should not be overlooked by finance executives looking to improve performance. ANOVA results confirm that working capital averages vary and are somewhat similar across sectors. As a result, when developing working capital management policies in Kenya, industry averages should not be overlooked.
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AN APPRAISAL OF THE ROLE OF WORKING CAPITAL MANAGEMENT ON ORGANISATIONAL PERFORMANCE
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