Effect of Working Capital Management Practices on Financial Performance of Private Universities in Kenya: A Case Study of The Management University of Africa

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Date

2016-05

Journal Title

Journal ISSN

Volume Title

Publisher

Daystar University, School of Business and Economics

Abstract

Working capital management is important because of its effects on a firm’s profitability and risk, and consequently its value. Specifically, a more aggressive working capital policy (low investment in working capital) is associated with a higher return and risk, while a conservative working capital policy (high investment in working capital) supposes a lower return and risk. The purpose of the study was to establish the effect of working capital management practices on financial performance of private Universities in Kenya with a focus on the Management University of Africa. The study was anchored on the liquidity theory and a descriptive research design was adopted. The researcher obtained a research permit from the National Commission of Science and Technology to visit the Management University of Africa for the purpose of collecting data. The researcher administered the questionnaires and visited the University’s administration to explain the purpose of the research and seek permission to administer the questionnaires Respondents were given the questionnaire with an assurance that strict confidentiality would be maintained as far as the responses and identity are concerned. The respondents were given one and a half weeks to respond and thereafter the filled-in questionnaires were collected. A key finding from the study was that there was a negative relationship between liquidity and cash conversion cycle. The study was concluded that the Management University of Africa is not good at managing its working capital. A key recommendation made to the University was that the University should try as much as possible to reduce the period for collecting receivables from customers. The advantage of reduced receivables is that it results to reduced bad debts through accelerated collections.

Description

MASTER OF BUSINESS ADMINISTRATION in Finance

Keywords

capital management, National Commission of Science and Technology

Citation

Nyaloti, L. A. (2016). Effect of Working Capital Management Practices on Financial Performance of Private Universities in Kenya: A Case Study of The Management University of Africa. Daystar University, School of Business and Economics