Ondieki, Olgar Kemuma2025-03-262025-03-262024-10https://ir-library.ku.ac.ke/handle/123456789/29855A Research Project Submitted To School Of Business, Economics and Tourism in Partial Fulfillment for the Requirements of the Award of Master of Business Administration (Finance Option) Degree of Kenyatta University, October 2024. Supervisor Farida AbdulPrivate health sector plays very fundamental role in the health sector in Kenya because it complements service delivery by the public health service providers. Besides offering health services to the general public, these providers are business entities whose primary objectives is to maximize returns on investment and other facets of profitability. As such, they face the challenge of realizing the foregoing financial objective. Since private hospitals are profit oriented besides providing alternative health care from public hospitals, falsification of financial statements, exaggeration of revenue and misstatement of expenses occur in order to meet the shareholder interests and expectation. In Kenya it is noted that small scale private health providers with small primary health care facilities face financial challenges. It is observed that the entities struggle to remain financially viable and as such the quality of their services differ. The general study objective was to assess the working capital management practices’ impact on private hospitals’ financial performance in Nakuru County. Specifically, the study sought to establish the effect of cash management, inventory management practices, and accounts receivables management practices and accounts payable period on private hospitals’ financial performance in Nakuru County. This study used the pecking order theory, transaction cost theory the Keynesian liquidity preference theory and agency theory. The unit of observation was 15 large private hospitals in Nakuru County while the unit of analysis was 52 employees from finance, store and procurement department in these hospitals. Data processing and analysis was done using SPSS software. Both descriptive statistics and inferential statistics was employed in data analysis. From the analysis the study found that taxes imposed on the purchases medicines and medical equipment’s negatively affects firms’ financial performance. The study also revealed that high salaries lowers the amount of cash to be invested which affects the firm’s financial performance. The study concluded that there was a positive and statistically significant correlation between cash management practices on financial performance of private hospitals in Nakuru County (r = 0.443; p < 0.05). The study also concluded that there was a positive and statistically significant correlation between inventory management practices on financial performance of private hospitals in Nakuru County, (r = 0.441; p < 0.05). The study further concluded that there was a strong positive correlation existed between accounts receivables management practices and financial performance of private hospitals in Nakuru County (r = 0.541; p < 0.05). The study also revealed that there was a strong positive correlation existed between accounts payable period on financial performance of private hospitals in Nakuru County (r = 0.641; p < 0.05). The study recommends that the hospital should adopt contemporary cash management practices, because proper cash management helps the business to have the required cash to run the daily activities. By generating enough cash, the hospital can meet its everyday business needs and avoid taking on debt. The study further recommended that the hospital should manage their accounts receivable effectively because, quality healthcare accounts receivable management is the primary requirement to keep the monthly cash flow of the medical practice healthy.enThesis