Working Capital Management and Financial Performance of Selected Supermarkets in Nairobi County, Kenya
Ferichina Gathoni Waweru *
Accounting and Finance Department, School of Business, Kenyatta University, P.O. Box 43844-00100, Nairobi, Kenya.
Gerald Atheru
Accounting and Finance Department, School of Business, Kenyatta University, P.O. Box 43844-00100, Nairobi, Kenya.
*Author to whom correspondence should be addressed.
Abstract
The study sought to investigate the effect of working capital management on financial performance of supermarkets in Nairobi, Kenya. The specific objectives were to assess the effect of quick ratio, creditor turnover and inventory turnover on financial performance of supermarkets in Nairobi, Kenya. The study found that quick ratio had significant positive effect on Nairobi’s supermarkets financial performance in Kenya as depicted by likelihood value of 0.010 and coefficient of 0.2928. The study further established that creditor turnover had insignificant effect on Nairobi’s supermarkets performance in Kenya as shown by likelihood value of 0.802 and coefficient of 0.0564. The study also found that inventory turnover had insignificant effect on Nairobi’s supermarkets financial performance in Kenya as illustrated by likelihood value of 0.107 and coefficient of 0.1425. The investigation suggests that firms should endeavor to maintain adequate levels of quick ratio. This is as higher level of quick ratio remains vital for the financial performance of firms. Additional research can be carried out on other aspects of financial performance such as return on equity as this will facilitate comparisons as well as effective formulation and implementation of policies.
Keywords: Working capital management, quick ratio, creditor turnover, inventory turnover, financial performance