Working Capital Management And Business Performance In Selected Small And Medium Enterprises In Mogadishu-Somalia

Abstract

This study was intended to determine the relationship between Working Capital Management and Business performance in selected Small and Medium enterprises in Mogadishu-Somalia. The specific objectives of the study were; to determine the level of working capital management, level of business performance and to establish relationship between working capital management and business performance in selected businesses under study. The descriptive survey and descriptive correlational designs were employed and questionnaires as a research instrument. A sample of 110 was drawn from the target population of the study. Statistical packages for social science (SPSS) were used to analyze variables and constructs of the research. Findings of the study with reference to research objectives indicate that the level of Working Capital Management and the level of business performance having a mean of the means (2.84 and 2.73) respectively were high. Results of the study further shows that there is significant relationship (R~ 0.733) between working capital management and business performance of selected Small and Medium enterprise in Mogadishu-Somalia. Result from the regression model

also reveals that business performance was influenced by some factors out of which 53.8% was from working capital management. it is concluded that managing components of working capital management as cash, inventory and receivables effectively can improve business performance. Finally the study recommends owners/managers of small and medium enterprises to invest in short term assets wisely in order to avoid over-capitalized and under-capitalized in components of working capital.