Effects of Cash Management on the Performance of Business Organisations in Uganda: A Case Study of Joda Traders Uganda Ltd, Kampala-Uganda

ABSTRACT This study analyzed the effect of cash management within an organization, towards the organization’s success. Cash management involves the planning and controlling of cash to ensure that cash is available when required and that it is used efficiently. Cash are held by companies for transaction motive, precautionary motive as well as speculative motive. Effective cash management activities cover the planning and controlling of cash level by continuously reviewing the organization’s liquidity policy and the working capital position of the organization. It assist organization to consider the efficient allocation of surplus cash holding to profitable use, ensuring that cash is available to meet all running costs, taxation, payments and dividends. Cash management identifies the cash balance which allows for the business to meet day to day expenses, but reduces cash holding costs. Organizations involve large financial transactions therefore, effectively managing operating funds and projecting future cash flow requirements is a MUST for organizations and finance managers. In order to do that, managers must understand specific cash flow movements within the business organization arising from their day-to-day decisions on investment, operations and financing. Interviews, observation and questionnaires were methods used to collect the data in this thesis which includes data concerning the progress of JODA, its sales, cash management system used, customer satisfaction status, and debt management from which conclusions and recommendations were made.

TABLE OF CONTENTS Page

TITLE PAGF

DECLARATION

APPROVAL jjj

DEDICATION

ACKNOWLEDGEMENTS v

TABLE OF CONTENTS Page vi

LIST OF TABLES ix

LIST OF CHARTS AND GRAPHS~ x

ABSTRACT xi

CHAPTER ONE 1

1.0 Introduction 1

1.1 Background to the study 1

1.2 Background to the case study 2

1.3 Statement of the Problem 4

1.4 Purpose of the study 4

1.5 Objectives of the Study 5

1.6 Research Questions 5

1.7 Scope of the Study 5

1.7.1 Subject Scope 5

1. 7.2 Geographical Scope 5

1.7.3 Time Scope 6

1.8 Significance of the Study 6

CHAPTER TWO 7

LITERATURE REVIEW 7

2.1 Introduction 7

Cash management 7

2.2.1 Guidelines for Managing Cash 8

2.2.2 Objectives of Cash Management 9

2.2.3 Goals of Cash Management 10

2.2.3.1 Elements of an Effective Cash Management Program 10

2.2.3.1.1 BankRelations 10

2.2.3.1.2 Cash Flow Statements 11

2.2.3.1. 3 Estimating Collection Receipts 11

2.2.3.1.4 Forecasting Disbursements 12

2.2.3.1.5 Analyzing Cash Flow and Preparing a Budget 13 ~

2.3 Conceptual framework 15

Schematic Diagram of the Conceptual Framework 15

2.3.1 Independent variables 16

vi

2.3.2 Intervening variables .17

2.3.3 Dependent variables 17

2.4 Follow up of cash management in JODA 19

2.4.1 Computerized Accounting System 19

2.4.2 Internal Controls 20

2.5 Profitability and Liquidity 28

CHAPTER THREE 29

RESEARCH METHODOLOGY 29

3.1 Introduction 29

3.2 Research Design 29

3.2.1 Quantitative/Qualitative 30

3.3 Study Population 33

3.4 Sample and Sampling procedure 33

3.5 Methods of Data collection 33

3.5.1 Interviews 33

3.5.2 Observation 34

3.5.3 Questionnaires 35

3.6 Validity and Reliability 35

3.7 Data Analysis 36

3.8 Ethical Consideration 36

3.9 Limitations 36

CHAPTER FOUR 38

DATA ANALYSIS, INTERPRETATION, PRESENTATION AND DISCUSSION

OF FINDINGS 38

4.1 Introduction 38

4.2 Results, Interpretations and Analysis 38

4.2.1 Analysis 38

4.3 Improvements JODA has made since the owners became importers 46

4.4 Discussions 50

4.5 How cash is managed in JODA Traders Uganda Limited 52

CHAPTER FIVE 53

SUMMARY, RECOMMENDATIONS AND CONCLUSIONS 53

5.1 Introduction 53

5.2 Achievements and failures of JODA traders Uganda Limited 53

5.3 Summary of main findings 53

5.3.1 Cash management system used 53

5.3.2 Relevancy of cash management for decisions in relation to sales 54

5.3.3 Relevance of cash management for decisions in relation to purchases 54

5.3.4 Effectively Investing Available Cash

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