ABSTRACT The study sought to establish the relationship between the working capital management practices and profitability of selected Small and Medium Enterprises (SME5) in Kampala, Uganda. The study was guided by four objectives namely; Determine the profile of the respondents in terms of age, gender, position, period of stay at workplace and highest educational qualification; Determine the extent of working capital components in the selected SMEs; To determine the level of liquidity and profitability of the selected Small and Medium Enterprises in Kampala, Uganda; And To establish the relationship between working capital management and profitability of SMEs in Uganda. The study utilized descriptive correlation survey design using questionnaire as the research instrument. A sample of 198 employees/owners of Small and Medium Enterprises were used as the respondents for the study. Purposive sampling method was used to identify the respondents. The data collected was analyzed using SPSS for means to determine level of dependent and the independent variables. Using the Pearson’s Linear Correlation Coefficient, the correlation between the two variables was determined. The study established that there is a high level of working capital management practices namely cash management, inventory management, accounts receivables management and accounts payables management among the selected SME5. The findings revealed that a significant relationship exists between working capital management and profitability of the selected SME5. The null hypothesis was rejected. The researcher recommends that SMEs take advantage of trade credit as a source of financing, seek to reduce the period debtors take to pay for their debts, the period it takes to receive cash after sales are made and the time it takes to sell off their stocks so as to increase their profitability.
TABLE OF CONTENTS
Preliminaries Page
Declaration A
Declaration B ii
Approval Sheet iii
Dedication iv
Acknowledgement v
Abstract vi
Table of content vii
List of tables x
Chapter
One THE PROBLEM AND ITS SCOPE 1
Background of the study 1
Statement of the problem 3
Purpose of the study 4
Research objectives 4
Research questions 5
Hypothesis 5
Scope of the study 5
vii
Significance of the study 6
Operational definition 7
Two REVIEW OF RELATED LITERATURE 9
Concepts, Opinions, Ideas, from authors /experts. 9
Theoretical perspectives 16
Related studies 18
Three METHODOLOGY 23
Research design 23
Research population 23
Sample size 23
Sample procedure 23
Research Instrument 24
Validity and Reliability 24
Data Gathering procedure 25
Data analysis 26
Ethical consideration 27
Limitations of the study 27
Viii
Four DATA PRESETANTION AND DATA ANALYSIS 28
Five FINDINGS, CONCLUSION AND RECOMMENDATIONS 43
Findings 43
Conclusion 46
Recommendations 47
Reference 48
Appendices 52
Appendix I Transmittal letter 52
Appendix II Authorization Letter 53
Appendix III Acknowledgement by Respondents 54
Appendix IV Clearance from the Ethics Committee 55
