Working Capital Management and Financial Performance of Deposit Taking Savings and Credit Cooperative Societies in Central Region, Kenya
Loading...
Date
2023
Authors
Wangechi, Samuel Wanjohi
Irungu, Anthony Mugetha
Journal Title
Journal ISSN
Volume Title
Publisher
EdinBurg Peer Reviewed Journals and Books publishers
Abstract
The goal of the investigation was to determine the effect of management of working capital on
the financial performance of deposit-taking SACCOs in Central Region, Kenya. The
investigation sought the impact of accounts receivable, accounts payable management, and
cash management on performance. The theoretical literature review concentrated on
conversion Cycle Theory, agency theory, transaction cost theory, and pecking order theory.
The study adopted a causal research design. In this investigation, 27 DT SACCOs in Central
Region, Kenya were the target population. Due to small and manageable size of the SACCOs,
the study used a census. Five years of secondary data was collected (2017- 2021). The data was
analyzed using descriptive, trend analysis and panel regression. The investigation indicated
that cash management had a progressive and noteworthy coefficient of (β was 0.219, p was
0.000). The findings further confirms that accounts receivable management had a progressive
and noteworthy influence on financial success of the SACCOs (β was 0.005, p=0.002). Further,
accounts payable management had a negative and unworthy effect on financial success of the
SACCOs (β was -0.004, p was 0.081). Government and the Ministry of Cooperatives could
create policies that are fit for the execution of cash management and accounts receivable
practices in SACCOs. This will enhance efficiency and uniformity in the adoption and use of
working capital practices in SACCOs. SACCOs should invest more in cash management
practices since it had the highest impact on financial performance. Also, the report suggests
that SACCOs establish a norm of standard liquidity place to lower the risk of losses due to
excess cash at the workplace, which could arm the performance of SMEs. However, SACCOs
should not emphasize accounts payable since it did not affect their financial performance.
Description
Article
Keywords
Working capital management, account payable, account receivables, cash management, financial performance
Citation
Wangechi, S. W., & Irungu, A. M. (2023). Working Capital Management and Financial Performance of Deposit Taking Savings and Credit Cooperative Societies in Central Region, Kenya. Journal of Finance and Accounting, 3(1), 34-46.