TABLE OF CONTENTS
DECLARATION
APPROVAL
DEDICATION
ACKNOWLEDGEMENT iv
TABLE OF CONTENTS V
LIST OF ACRONYMS Xi
ABSTRACT xii
CHAPTER ONE 1
1.0 Introduction 1
1.1 Background of the study I
1.1 .1 Historical perspective
.1.2 Theoretical perspective 2
1 .1 .3 Contextual Background 3
1.2 Statement of the Problem 4
1.3 Purpose of the study 4
1.4 Research Objectives 5
1.5 Research Questions 5
1.6 Hypothesis 5
1.7 Scope of the Study 5
1.7.1 Geographical scope 5
1.7.3 Content Scope 6
1.8 Time scope 6
1.9 Significance of the study 6
V
1.9.1 Definition of Key Operational Terms .6
CHAPTER TWO 8
LITERATURE REVIEW 8
2.0 Introduction 8
2.1 Theoretical Review 8
2.1.2 PeckingOrderTheory 9
2.2 Conceptual Review 1 1
2.3 Conceptual Framework 12
2.4 The effect of Inventory Management practice on Financial Performance 13
2.5 Effect ofAccount Receivable Management on Financial Performance 13
2.6 The effect of account payable on financial performance 14
2.7 The effect of working capital management and financial performance 15
2.8 Financial performance 16
2.9 Research Gaps 18
CHAPTER THREE 19
RESEARCH METHODOLOGY 19
3.0 Introduction 19
3.1 Research Design 19
3.2 Research Population 19
3.2.1 Target Population 19
3.3 Sample Size 19
3.4 Sampling Procedure 21
3.5 Research Instrument 21
3.6 Measure of variables 21
vi
3.7.1
3.7 Validity
Validity
and~
..22
3.72 l~e1iability 22
3.8 Data Gathering Procedures .22
3.9. Data Analysis .23
3.9.1 Quantitative data analysis .23
3.9.2 (≥ualitative data analysis .23
3.10 Ethical Consideration................ ..., ....24
CHAPTER FOUR~ 25
DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS 25
4.0 Introduction .. 25
4.1 J)eniographic Infbrination .25
4.1.1 Gender of respondents . ....... .25
4.12 Age of the Respondents 27
4.2.3 Education Status of Respondents 28
42.4 Period ofService ofRespondents 30
4.1 Response Rate 32
4.3.1 Findings about Accounts Receivable Management at Makindye Division 33
4.32 Findings about Cash Management practices and financial performance of SMEs 36
4.3.3 Findings about Inventory Management of SMEs in Makindye Division 38
Chapter 5
5.0 Introduction 41
5.1 Suniniary ofFindings 41
ABSTRACT The study was set to assess the effect of working capital management practices and financial performance of small and medium enterprises in Nsambya Parish, Makindye Division. Three specific objectives guided the study, that is; To determine the effect of accounts receivable management practices and financial performance on SMEs in Nsambya Parish, Makindye Division; To examine the effect of cash management practices and financial performance of SMEs in Nsambya Parish, Makindye Division. To establish the effect of inventory management practices and financial performance of SMEs in Nsambya Parish, Makindye Division; The study was guided by the trade-off theory by Modigliani and Miller (1963) and the goal theory by Etzioni (1964). A descriptive case study research design was used with a mixed approach using both quantitative and qualitative data. Total population was 345 from which a sample of 181 was derived using Krejcie and Morgan, (1970) table. Data was generated using questionnaire method, supplemented with interview, and documentary review. The Findings revealed that there was a moderate significant positive relationship between inventory management practices and financial performance of SMEs in Nsambya Parish, Makindye Division. Recommendations were: to improve in accounts receivable management by offering cash discounts to foreign customers to whom SMEs has not been offering discounts. to improve in accounts receivable management. The procurement manager may suggest to management a payment of higher premium prices for products as a trade-off with interest payment. For an effective cash management, it is recommended that the whole management team and the finance manager in particular need to enforce adherence to the cash policy put into place to guide and control cash management. To improve cash management and minimise cash constraints, the finance manager needs to match the timing of receipts from accounts receivables and payments of accounts payable. To boost inventory levels. In light of the competition faced, and the limited funds available to acquire inventory, the finance manager can advise management on sell of more shares to product farmers to raise more capital among others. x
