| dc.description.abstract | Working capital management is a critical driver of a firm’s liquidity, profitability, and long-term financial stability. While past studies have examined its application in manufacturing and small and medium-sized enterprises, Kenya’s public water utilities have received comparatively little research attention despite their vital role in delivering essential services. Kisumu Water and Sanitation Company Ltd (KIWASCO) has long faced operational challenges, including an estimated annual loss of more than 20,000 cubic meters of water each year, valued at approximately Ksh. 350 million. The company also struggles with rising inventory levels, persistently high non-revenue water, and missed revenue targets. This study set out to investigate the effect of working capital management strategies on the financial performance of KIWASCO. The specific objectives were to assess the impact of cash management, accounts receivable management, and inventory control on financial performance. The study was guided by the Operating Cycle Theory, which argues that efficient management of cash, receivables, and inventory shortens the operating cycle, thereby improving liquidity and profitability A correlational research design was used, targeting all 48 employees in the finance and accounting departments through a census approach. Data was collected using structured questionnaires, and a pilot test confirmed reliability with a Cronbach’s Alpha coefficient of 0. 789. Data analysis was performed using SPSS version 24, employing both descriptive and inferential statistical techniques. The results were presented using percentages, graphs, charts, and tables. Specifically, the analysis included descriptive statistics, correlation analysis, and regression modeling, all derived from the study’s empirical findings. Findings showed that most respondents agreed that cash management, accounts receivable management, and inventory control directly affect financial performance. Regression analysis revealed significant positive effects for cash management (β = 0.487, t = 3.568, p < 0.05), accounts receivable management (β = 0.557, t = 4.296, p < 0.05), and inventory management (β = 0.665, t = 5.706, p < 0.05). The overall model confirmed that these strategies were statistically significant in explaining financial performance, with results leading to the rejection of all null hypotheses. Findings of the overall model revealed the following: Cash management had significant effect on financial performance (ß = 0.005, t = 0.030, p = 0.003); accounts receivable management had significant effect on financial performance (ß = 0.258, t = 1.591, p = 0.023); and inventory management had significant effect on financial performance (β = 0.514, t-value = 3.429, p=0.001) of Kisumu Water and Sanitation Company Limited. The study concludes that strengthening cash flow practices, improving receivables collection, and adopting robust inventory controls are essential to enhancing financial performance in public utilities. These findings address a critical research gap in Kenya’s water sector and provide practical guidance for managers, policymakers, and scholars working to improve efficiency and sustainability in similar organizations. | en_US |
