| dc.description.abstract | Working capital management is a very important component of corporate finance because it directly involves the planning and controlling of current assets and liabilities in a manner that eliminates the risk of inability to meet short term obligations and avoid excessive investments in these assets. However, some managers use wrong methods for working capital decisions which results in their under or overcapitalization or worse still, liquidation of their organizations. This has been the case of savings and credit co-operative societies (SACCO’S) in Kisumu County in the last decade. It has been noted that SACCO’s that are newly registered and operating within Kisumu county fail within the first three years of their formation according to statistics from Kisumu county government. In the financial year 2017/2018, a total of 14 Sacco’s within Kisumu County failed and closed down their operations. This has been attributed to failure to effectively manage their working capital. Prior studies have produced mixed results as regards the effect of working capital on performance of firms. The purpose of this study was to analyze the effect of working capital management on performance of Sacco’s within Kisumu County. The specific objectives of the study were to establish the effect of cash management on performance of Sacco’s, to determine the effect of debt management on performance of Sacco’s and to determine the effect of inventory management on the performance of Sacco’s within Kisumu County. The study was anchored on risk and return theory, Operating cycle theory and cash conversion cycle theory. A correlational survey design was adopted with a study population 47 finance officers judgmentally selected from 47 Sacco’s in Kisumu County. Reliability of the research instrument was ascertained by use of Cronbach’s alpha coefficient at α= 0.7. Validity of the instrument was ascertained through expert opinion. Primary data was collected by use of structured questionnaire while secondary data was obtained from the audited financial reports of the Sacco’s. Data analysis was done using descriptive statistics and results presented in form of tables. The results showed that the unstandardized coefficient for cash management was a 0.338 meaning that a unit % age change in cash management Sacco’s is likely to lead to a change in performance by 0.338%. Similarly, the unstandardized coefficients for debt management and inventory management were 0.680 and 0.234 respectively. This means that a unit % age change debt management and inventory management is likely to lead to a change in Sacco’s Performance by 0.1680% and 0.234% respectively. R2 = 0.702 meaning that cash management, debt management and inventory management all together account for 70.2% of performance by Sacco’s in Kisumu County. The study concludes that working capital management is a positive and predictor of operational performance of Sacco’s in Kisumu County. The study may guide policy makers to appreciate the importance of effective working capital management for the success of organizations. It may also form a basis of theory building for future research endeavors. | en_US |
