Professional Documents
Culture Documents
I, Ojara Herbert do hereby declare that the research project is entirely my original work,
except where acknowledged and that it has not been submitted before to any other
university or institution of higher learning for the award of a degree.
Signed Date..
APPROVAL
This report by Ojara Herbert has been under my supervision and is now ready for
submission
Signed................... Date
DEDICATION
This research is dedicated to my dear father Mzee Hajusu Juma Wilberforce whose total
investment in my education I adore and appreciate, my beloved mother Kharono Juliet
who has always been there for me in all difficult times to support and encourage me, my
ii
Dear Brother Lumonya Patrick for the financial support, my dear friend Odong Justin for
being so close to support me, my employer madam Nyaburu Catherine, my beloved
sisters Stella and Sarah, Brother Hajusu Sam and all my friends and course mates with
whom we shared the great skills of learning.
iii
ACKNOWLEDGEMENT
The greatest of thanks go to the almighty God who has enabled me to achieve whatever I
have in this world because without him, I would not have reached this level.
I am so grateful to my supervisor Mr. Nuwagaba Geoffrey who whole heartedly
contributed a lot towards the success of this research project. You have always
professionally guided me and given your precious time to correct me whenever I go
astray. Without your supervision and guidance, this research work would not have been
easy to accomplish. May the almighty God bless richly!
Special thanks go to my friend Mr. Odong Justin for all the financial support and putting
a difference to my life through the care and brotherly love you offered to me. Sincerely
you contributed so much towards the accomplishment of this course and may God
continue to bless you and your family.
Dad, the words to describe your importance and contribution to what I am. You have been
such a caring father. You gave your best to make me and my other siblings what we are
now and pray that the almighty God may give you life so that you live to see the fruits of
your effort!
Finally, Mum I sometimes fail to get words enough to express how valuable you are to
me and the entire family. Sincerely without you it would not have been easy for us to get
to where we are and what we are. You have determined our destiny and its my prayer that
God may allow you to see us when we are what you wished we be!
iv
TABLE OF CONTENTS
Page
DECLARATION.................................................................................................................i
APPROVAL.......................................................................................................................ii
DEDICATION..................................................................................................................iii
ACKNOWLEDGEMENT...............................................................................................iv
TABLE OF CONTENTS...................................................................................................v
LIST OF TABLES..........................................................................................................viii
ABSTRACT......................................................................................................................ix
CHAPTER ONE................................................................................................................1
INTRODUCTION.............................................................................................................1
1.0 Background of the study................................................................................................1
1.1 Statement of the Problem...............................................................................................2
1.2 Purpose of the Study......................................................................................................3
1.3 Objectives of the Study..................................................................................................3
1.4 Research Questions........................................................................................................3
1.5 Scope of the Study.........................................................................................................4
1.5.1 Content scope..............................................................................................................4
1.5.2 Geographical scope.....................................................................................................4
1.5.3 Time scope..................................................................................................................4
1.6 Significance of the Study...............................................................................................4
CHAPTER TWO...............................................................................................................5
LITERATURE REVIEW..................................................................................................5
2.0 Introduction....................................................................................................................5
2.1 Working Capital Management.......................................................................................5
2.2 Financial Performance...................................................................................................7
2.3 The relationship between funds management and Financial Performance..................11
2.4 Conclusion...................................................................................................................13
CHAPTER THREE.........................................................................................................14
METHODOLOGY..........................................................................................................14
3.0 Introduction..................................................................................................................14
3.1 Research Design..........................................................................................................14
3.2 Study population..........................................................................................................14
3.4 Sample Design.............................................................................................................15
3.4.1 Sampling method......................................................................................................15
3.4.2 Sample size...............................................................................................................15
3.5 Sources of Data............................................................................................................15
3.6 Data collection methods and instruments....................................................................16
3.6.1 Questionnaire............................................................................................................16
3.7 Data Processing and Analysis......................................................................................16
3.7.1 Data processing.........................................................................................................16
3.7.2 Data analysis.............................................................................................................16
3.8 Challenges/ limitations during the study.....................................................................16
vi
CHAPTER FOUR...........................................................................................................18
DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS. .18
4.0 Introduction..................................................................................................................18
4.1 Demographic Characteristics of Respondents.............................................................18
4.2 Working Capital Management practices in Best cuts Uganda ltd................................20
4.3 The levels of financial performance of Best Cuts (U) Ltd..........................................23
4.4 The relationship between Working Capital Management and Financial Performance
of Best cuts Uganda ltd......................................................................................................28
CHAPTER FIVE.............................................................................................................29
SUMMARY CONCLUSION AND RECOMMENDATIONS.....................................29
5.0 Introduction..................................................................................................................29
5.1 Summary of the findings.............................................................................................29
5.2 Conclusion...................................................................................................................30
5.3 Recommendations........................................................................................................30
5.4 Areas for further research............................................................................................31
REFERENCES..................................................................................................................32
APPENDIX 1: QUESTIONNAIRE FOR STAFF MEMBERS........................................35
APPENDIX 2: TIME FRAME..........................................................................................40
APPENDIX 3: BUDGET ESTIMATES............................................................................41
vii
LIST OF TABLES
Page
viii
ABSTRACT
The purpose of the study was to establish the extent to which working capital
management practices by small and medium enterprises would impact on the
financial performance of Best cuts Uganda ltd basing on the following objectives; to
identify the various working capital management practices in Best cuts Uganda ltd,
to find out the levels of financial performance of Best Cuts (U) Ltd, and to examine
the relationship between working capital management and financial performance of
Best cuts Uganda ltd.
The research involved a cross sectional study using both qualitative and quantitative
research centered on working capital management practices. Simple random
sampling techniques was used, and a sample of 30 respondents from Best Cuts
Uganda Ltd who among others were the employees from different departments,
management and clients who were chosen for the study. Data was collected by
questionnaires. the study was analyzed using statistical techniques and qualitative
and qualitative techniques such as regression and correlation analysis with help of
Ms Excel and Ms Word to clearly come up with the relationship between working
capital management and financial performance.
Findings revealed that all funds in Best Cuts Uganda Ltd are recorded by one person,
Daily incomes and expenses are recorded in the cashbook, recorded in the textbook,
Daily money received by the Best Cuts Uganda Ltd is not banked on that same day,
Purchase order is not first issued for all goods bought.
growth for Enterprise, the days when enterprise makes more money some funds are
withdrawn from the enterprise and this reduces the growth of the business. Besides that
there is a strong positive relationship between Working Capital Management and
Financial Performance
ix
CHAPTER ONE
INTRODUCTION
1.0 Background of the study
Small and medium enterprises play a vital role in the development of the industrial and
business sector. Besides being one of the vehicles of economic progress, these have been
found to be one of the most effective means of avoiding the ever increasing
unemployment which is common and acute in developing countries like Uganda
Broadbent and Cullen (2003).
Small and medium enterprises are not easy to define but in simple terms this is a private
company or one persons business having less than or slightly higher than 10-20
employees or annual sales turnover of between Uganda shillings 1,000,000-50,000,000
Broadbent and Cullen (2003).
In Uganda today, the foundation to development has to been laid on several pillar keys,
one of which is the establishment and management of small and medium enterprises.
Approximately 80% of all businesses in Uganda are small and medium scale and almost
represent 50% of the employment in the country. Consequently, therefore, the Ugandan
government is looking to the private sector generally and the small and medium
enterprises in particular to take the lead in future industrialization and has given them the
necessary, though not all support to take off Ssekatawa (2010).
This is evidenced in government promoted schemes like the Private sector foundation
Uganda (PSFU), which is Ugandas umbrella private sector body that offers financial
support in form of sharing grants to micro, small and medium enterprises to enable them
obtain technical or financial expertise for purposes of becoming more productive and
competitive. It achieves this through its development scheme Business Uganda
Development scheme- enterprise Development Support.
The Budget speech (2011) highlight that real industrialization and development for a poor
Uganda must be through acquisition of indigenous capacities by adopting policies geared
towards promotion of small-scale enterprises. The 2011-2012 Budget proposals also
highlighted the need to support small-scale businesses. This is evidenced by the 9 billion
Uganda shillings that were proposed for the Jua Kali artisans to develop appropriate
industrial sites.
Best cuts (U) Limited is an Agro-Business Farm that is registered under the Small
Business Enterprises (SMEs). Its owned by Ugandans whose philosophy is to provide
high quality products, be consistent, efficient, and offer personalized services to
customers. The farm concentrates in production, purchase and supply of broilers to both
local and international markets. To ensure this quality, the company produces its own
feed for the broilers and also works with well organized out growers who understand its
quality needs .
The farms offices are located in Bweyogerere, Buto zone with farm extension in
Bunyiri-Mukono. The farms objective is to be a leading broiler processing and marketing
company in Uganda by 2013 given the competitive edge of quality and efficiency it has
developed with the motivated staff.
operating expenses. Poor working capital particularly limited liquidity in the long run
causes poor financial performance for the business as it cannot easily pay off creditors.
Therefore, it is upon this inefficiency that the researcher seeks to establish the causes of
insufficient cash inflow for Best cuts Uganda ltd.
ltd.
To find out the levels of financial performance of Best Cuts (U) Ltd.
To examine the relationship between working capital management and financial
performance of Best cuts Uganda ltd.
ltd.
What are the levels of financial performance of Best Cuts (U) Ltd.
What is the relationship between working capital management and financial
performance of Best cuts Uganda ltd.
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter discusses the already existing literature about funds management and
profitability. This literature was obtained from textbooks, and publication, periodicals
research reports, the company financial documents and Internet among others.
4
Funds inflows and out flows are somewhat unpredictable with the degree of predictability
varying among firms and industries. Therefore firms need to hold some funds (or more
often marketable securities) in reserve for random, un fore seen fluctuations in inflows
and outflows. These safely stock of funds are called the precautionary balance and the
less predictable the firms funds flows the larger the necessary funds balance.
Funds balance may also be held to enable the firm to take advantage of any bargain
purchases that might arise, these funds are defined as speculative balances. For example
reduction in the price of raw materials, any profitable short-term investment that may
happen, the firm should maintain such balance to take advantage of the investment
opportunities that may arise Campsey (2005).
Lending institutions such as banks, makes money by lending out funds that have been
deposited with it. So the larger its deposits, the better the bank profit position. If a bank is
providing services to a customer, it generally requires the customer to leave a minimum
balance on deposit to help offset the cost of providing the service Campsey (2008).
Funds balances are necessary in business operations because payments must be made in
funds and the receipts are deposited in the funds account. These funds balances are
associated with routine payments and collections are known as transaction balances Knott
(2008).
Although a carefully prepared funds budget is a necessary starting point for managing the
firms funds, there are other elements of a good funds management programs. The
primary funds management activities are performed jointly by the firm and its main bank,
but the financial manager is responsible for the effectiveness of the funds management
programs. The most commonly funds management techniques Knott (2008).
One way, in which a firm can keep its funds on hand longer, would simply be by delay
payments, but this would lead to such obvious difficulties as being labeled a dead beat.
Firms have always lengthened the collection period for their cheques so as to delay funds
out flows. Payables Centralization permits the financial manager to evaluate the payment
coming, one for the entire firm and to schedule funds transfers to meet the needs of the
company wide basis. Centralizing disbursements also permits more efficient monitoring
of payables and float balances Van (2000).
When a firm is actively trying to use floats, it will often arrange with its bank to have the
use of an overdraft system. In such a system, the firm writes cheques in excess of its
actual balance and its bank automatically extends loans to cover funds shortage. The
overdraft is sometime interest free so the firm can use it to carry out its operations, which
can yield a return in the long run Sanford et al (2001).
He further argued that the profit motive is not only fundamental to our ability to reward
shareholders and pay employees; it's fundamental to excellent journalism. Far from
corrupting the craft, profits enhance it. Expansion drives diversity and diversity protects
and strengthens our craft. Nevertheless Money is only used for two things. One, its to
make you comfortable, and the more comfortable you are the more creative you will
become. And the other purpose is it enables you to extend the service you provide far
beyond your own presence.
The country is now universally recognised as a nation on the move and takes its place
amongst the successful economies in the region. The future potential is enormous but the
country's destiny is in our hands. The time has come to move from small increments to
bold, large initiatives. The time has come to stretch the envelope and set goals which
were earlier not seen to be possible. The time has come for performance to be measured
and for allocated funds of the government to reach the people for whom they were
intended Matovu and Ritva (2001).
The theories discussed so far all recognize that the attitudes and abilities of the business
owner have an important impact on small firm growth and will be reflected in strategic
choices and the ways in which he or she operates the business. The following section will
draw from a variety of theoretical and empirical sources on small firm growth for the
purpose of developing expected theoretical relationships between particular sets of
variables, or factors of growth, and business growth Matovu and Ritva (2001).
It has been proposed in the literature that women may have fewer opportunities to
develop relevant experiences, may have fewer networks to get assistance and may have
greater difficulty in assembling resources Sexton and Robinson (1989). There is some
evidence that banks may impose more stringent requirements on women business owners
in regard to collateral for loans, and therefore limit their ability to grow Riding and Swift,
(1990). Women may also be more family oriented and be less keen in pursuing economic
goals related to expansion of the firm (Brush, 2002). Cooper et al., (2004) found that
being female had a negative impact on the growth of small ventures but had no impact on
the survival of the firm.
Younger individuals may be more willing to assume risks and grow their business.
Following Davidson's argument, a younger individual may have a higher need for
additional income. The burden of supporting a family and meeting mortgage payments
generally declines with age. An older individual who continues to be the owner- manager
of a small firm is more likely to have reached his/her initial aspirations. However, while
younger individuals have more motivation to expand their business they also may have
fewer financial resources and fewer networks. The limited empirical evidence suggests
that the owner-manager's age tends to be negatively related to growth Boswell (2003).
Evidence from Borjas, (2006) suggests that immigrants are more likely to become selfemployed and that they are more likely to create higher incomes from this activity than
will native entrepreneurs. The explanation for this differential is that immigrants create
enclaves by concentrating in specific geographic areas, which in turn create and expand
opportunities for small entrepreneurial ventures, in particular for immigrants of the same
national background as the residents of the enclave. However, it is suggested that there
may be limits to the growth of entrepreneurial ventures owned by immigrants as enclaves
are in poor locations and offer limited access to the general market. It is also suggested
that immigrants may have fewer contacts and more difficulty in obtaining insurance,
credit from suppliers and access to prosperous customers. No study has linked
immigration status to business growth. However, there is some empirical evidence that
suggests that being part of a racial minority is linked to lower probabilities of both
survival and growth Cooper et al (2004).
8
The effect of education has been widely studied. Education is presumably related to
knowledge and skills, motivation, self-confidence, problem solving ability, commitment
and discipline. Higher education is expected to increase the ability of the entrepreneur to
cope with problems and seize opportunities that are important to the growth of the firm.
Empirical evidence on the effects of education on firm performance is mixed. In ten out
of seventeen empirical studies surveyed, Cooper et al. (2002), found a positive
relationship between prior level of education and firm performance. Cooper et al. (2004)
found that having a Bachelor's degree has a positive impact on both survival and growth
of small ventures.
According to the small business literature, there is a distinct difference between the small
business owner and the entrepreneur. Birch (2007) distinguishes between "income
substituters" and "entrepreneurs", the former substituting paid-employment income with
business income, the latter being committed to the growth of their business. Similarly,
Hay (1994) makes the distinction between "value builders" and "life-stylers." The latter
seek long-term stability instead of growth, and use the business as a means of generating
income sufficient to support a certain "life-style." Canadian evidence supports this
finding. In an Ontario survey of small business start-ups, half of new firm owners
intended that their business would simply generate enough income to make a living for
themselves (Blatt, 2003). Therefore, for entrepreneurial ventures the willingness of the
owner-manager to grow is as important as his ability to foster and manage growth.
Entrepreneurial intensity refers to the willingness of the individual to assume risk and be
pro-active as an indicator of commitment to growth McCelland (2001). The level of
active risk taking by the owner-manager may also determine how willing he/she is to tap
the various resources necessary for developing the firm. Active risk taking is
demonstrated by the owner-manager's willingness to accept personal financial risk.
Perren (2000), in sixteen case studies of micro-enterprises, found that active risk taking
was a key factor that conditioned the owner-manager's willingness to tap the physical,
material, financial and intangible resources necessary for firm growth beyond the microenterprise phase.
It is likely that individuals who hold a concurrent paid-employment job may have neither
the time nor the motivation to invest in the growth of their business. It is likely that some
of these individuals are complementing their paid-employment income with some
independent business income, in order to support a certain lifestyle Riding et al (2008).
Management know-how embodied in the entrepreneur may be an important factor in the
growth of the firm. Management know-how may result from having had parents who
were entrepreneurs themselves, or from previous paid-employment experience in a
similar business, or by previous management experience of the owner. Furthermore,
management know-how may be acquired through the owner-manager having access to
professional advisors or a network of contacts such as suppliers, customers, business
associations, etc., or from involvement of partners Matovu and Ritva (2001).
A number of studies have shown that entrepreneurs are more likely to be from families in
which the parents owned a business. It is assumed that young individuals develop
knowledge of what is involved in running a business Dushenseau and Gardner (1988),
and that they are more likely to perceive entrepreneurship as a viable career choice. There
is indeed some empirical evidence to suggest that coming from an entrepreneurial family
background increases the likelihood of survival Cooper et al., 2004, Papadaki et al.,
(2000). However, there is little evidence on the impact of family background on the
growth prospects of an entrepreneurial venture. Though one study has found no
relationship between entrepreneurial background and growth of a small venture (Cooper
et al (2004), we will test whether coming from a family of entrepreneurs has a positive
impact on business growth.
10
Wilkes (2006) and Samuels (2006), share the same view as Shaw (2006), on the
relationship between funds management and the profitability of a firm. Wilkes (2006),
argues that if a firm does not manage its funds properly it can easily go into liquidation as
a result of failing to pay the out standing liabilities (suppliers, wages) and meeting the
day to day operation . This has an adverse impact on the profitability of an organization.
He adds that, a firm which keeps too much funds fore goes a return if it invested in other
profitable ventures. Funds can be lent out even for a short period of time and interest is
earned. Hence impacting on the profitability position of and organization. The
organization must establish and install funds management programs to ensure that there
is a balance between benefits and costs. However, these programs may be expensive to
operate for example use of remote collection and disbursement centers, involve additional
costs and banks involved will require the firm to maintain adequate deposit balance or
pay sufficient fees to justify the services. All these costs impact on the profitability
position of the firm most especially small scale and medium enterprises.
Campsey, (2005) explains that while there are good reasons for holding adequate funds
balances, there is an important reason for not holding excess funds balance. Since funds
is a non-earning asset, excessive funds balances simply lower the total asset turnover
there by reducing both the firms rate of return on equity and value of its stock. Therefore
firms are interested in establishing procedures for increasing the efficiency of their funds
management and the higher the level of short-term interest, the greater the opportunity
cost associated with holding excess funds. This implies that holding excess funds means
that returns are foregone hence adversely impacting on the profitability position of the
firm.
Khazi (2002), points out the relationship between funds management and profitability by
giving the effect of excess and shortage of funds. Holding excess funds means that there
is an opportunity cost in form of a return foregone because of holding it. On the other
hand funds shortage will disrupt the firms operation for instance failure to acquire
inventory for sale, inputs and meeting customers orders. Such situation requires that an
11
organization must design an appropriate funds management policy to ensure that the best
is derived from every single coin held at any period of time.
Management of small scale and medium businesses should establish and strengthen the
internal controls over funds and other financial resources to reduce on mismanagement
and misappropriations. The internal controls to be established among others may include;
segregation of duties, approval and authorization, physical controls, accuracy and
arithmetic, supervision of lower employees, and daily banking of funds received to
reduce on theft and mismanagement of funds resources Wilkes (2006).
He further noted that small scale businesses should Introduce motivation incentives for
examples increased salaries, wage and other non-monetary rewards like presents or gifts
to all employees with good performance records. This will reduce on cases of
embezzlement and theft of business funds and develop a heart of commitment hence
efficient management of funds.
Management of small scale and medium businesses should employ competent staffs that
have experience and skill in funds management. Employees must be trained to acquire
the skills to manage businesses funds. The management should acquire funds from
financial institutions so as to supplement its capital base to expand the scale of operation,
since lack of capital is one of the major causes of low performance Knott (2008).
Management of small-scale and medium businesses must always prepare funds budgets
and books of account such as; funds book, income statement and the balance sheet in
order to ascertain their financial performance and design ways of making improvements
Kakuru (2000).
2.4 Conclusion
Organizations should hold funds to keep the liquidity level balanced so as to maximize
profitability. However, care must be taken to avoid excess funds because of its effect
12
such as theft, misappropriation and misallocation and still fore going a return that could
have been earned through investing the funds resources else where in profitable ventures.
13
CHAPTER THREE
METHODOLOGY
3.0 Introduction
This chapter elaborates the entire design of the study and how it was carried out. It also
explains how the study was conducted, the area of the study, sample size and sampling
technique. It also indicates how the data was collected and analyzed as well as the
limitations encountered during the study.
14
No of Respondents
15
7
2
2
4
30
15
3.6.1 Questionnaire
This was the dominant primary data collection method in the study. Here comprehensive
self administered questionnaires were the main instrument in the study. These were
designed to gather information and explore the key variables addressed to staff and
management. Both open and closed ended questionnaires were used to let the respondents
give their own opinion about the research problem.
16
17
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS
4.0 Introduction
This chapter involves data presentation, analysis, and interpretations the findings of the
study with reference to working capital management and financial performance. This was
done mainly through questionnaire to the selected respondents.
Table 2: Age
Response
Frequency
Percentage
Below 20 yrs
10
20yrs-24yrs
23
25yrs-29yrs
14
47
20
Total
30
100
18
Frequency
Percentage
Male
17
57
Female
13
43
Total
30
100
Frequency
Percentage
Certificate
12
40
Diploma
10
33
Degree
27
Total
30
100
19
Frequency
Percentage
30
3-5years
11
37
Above 5years
10
33
Total
30
100
Frequency
Percentage
Yes
18
60
No
12
40
Not sure
Total
30
100
20
From the table above 60% of the respondents all funds in Enterprise are recorded by
one person, 40% disagreed, and 7% were not sure. This implies that all funds in
Enterprise are recorded by one person
On the question regarding the people responsible for recording funds in the enterprise
revealed that the owners of the business, some noted for friends of owners of the business
and others noted for relatives and shop attendants.
A question on where daily income and expenses are recorded revealed that daily incomes
and expenses are recorded in the cashbook, others noted for note book. Besides that some
respondents said that daily incomes and expenses are recorded in the textbook.
Table 7: Daily money received by the Enterprise is banked on that same day
Response
Frequency
Percentage
Strongly Agree
Agree
27
Not sure
Disagree
16
53
Strongly Disagree
13
Total
30
100
21
Table 8: All money received by the Enterprise is recorded in the books of accounts
Response
Frequency
Percentage
Strongly Agree
Agree
16
53
Not sure
13
Disagree
23
Strongly Disagree
Total
30
100
22
Frequency
Percentage
Strongly Agree
Agree
17
Not sure
Disagree
17
57
Strongly Disagree
16
Total
30
100
Frequency
Percentage
Yes
19
63
No
11
37
Not sure
Total
30
100
23
From the table above 63% of the respondents noted that Capital of Enterprise increased
in the year 2010, and 37% disagreed. This implies that Capital of Enterprise increased
in the year 2010 for some business and did not increase for others.
Frequency
Percentage
Strongly Agree
Agree
Not sure
10
Disagree
30
Strongly Disagree
14
46
Total
30
100
24
Frequency
Percentage
Yes
16
53
No
12
40
Not sure
Total
30
100
Frequency
Percentage
Strongly Agree
Agree
10
Not sure
13
Disagree
11
37
Strongly Disagree
12
40
Total
30
100
2010, 10% were not sure, 37% disagreed, and 40% strongly
disagreed. This indicates that the number of shareholders did not increase in the year
2010.
Table 14: Rate Retained earnings in the year 2010
Response
Frequency
Percentage
Very low
25
Low
30
Moderate
17
57
High
10
Very high
Total
30
100
26
Table 15: The Enterprise is the main supplier to most of the supermarkets in
Kampala
Response
Frequency
Percentage
Strongly Agree
Agree
Not sure
13
Disagree
10
33
Strongly Disagree
14
47
Total
30
100
27
Working Capital
Management
Financial Performance
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Working
Capital
Management
1
.
30
.752**
.000
30
Financial
Performance
.752**
.000
30
1
.
30
From the table above, results showed that there is a strong positive relationship between
Working Capital Management and Financial Performance at Pearson correlation
coefficient r=0.752 implying that working capital management affects financial
performance by 75.2% and 24.8% by other factors.
28
CHAPTER FIVE
SUMMARY CONCLUSION AND RECOMMENDATIONS
5.0 Introduction
This chapter presents summary conclusion and recommendations in relation to the study
objectives
29
Uganda Ltd in the year 2010, the number of shareholders did not increase in the year
2010, retained earnings in the year 2010 were moderate. Nevertheless, respondents said
that they had more customers and majority said they had fewer customers, and the
Enterprise is not the main supplier to most of the retail shops in Kampala.
Findings revealed that there is a strong positive relationship between Working Capital
Management and Financial Performance at Pearson correlation coefficient r=0.752
implying that working capital management affects financial performance by 75.2%
and 24.8% by other factors.
5.2 Conclusion
Findings revealed that all funds in Best Cuts Uganda Ltd are recorded by one person,
Daily incomes and expenses are recorded in the cashbook, recorded in the textbook,
Daily money received by the Best Cuts Uganda Ltd is not banked on that same day,
Purchase order is not first issued for all goods bought. Capital of Enterprise increased in
the year
2010, the technology is too low, there were no more sales made by the
2010,
2010, retained earnings in the year 2010 were very low, daily recording of funds affect
growth for Enterprise, the days when enterprise makes more money some funds are
withdrawn from the enterprise and this reduces the growth of the business. Besides that
there is a strong positive relationship between
Financial Performance
5.3 Recommendations
Best Cuts Uganda Ltd need to ensure that all funds in Enterprise recorded by two people
in case of one person not being available this would help to reduce on the fraud that
might occur in the enterprise.
30
Daily incomes and expenses need to be recorded in a cash book or accounting packages
like pastel or quick books so that small scale enterprise can detect fraud in the system.
Best Cuts Uganda Ltd need to ensure that Daily money received by the Enterprise is
banked on that same day, to reduce on unnecessarily withdrawal of money from the
enterprise.
Best Cuts Uganda Ltd need to first issue out Purchase order for all goods bought. This
would help in the accountability and also stimulate auditing of their books of accounts
Best Cuts Uganda Ltd need to make a lot of advertisement of their products and services
so as to capture the available market this would increase on their revenue collected.
Much effort and a lot of control need to be emphasized on the funds management to
improve on the growth of the enterprise.
31
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growth
Dear respondents
This questionnaire is intended purely for academic purposes. It is for study under the
topic Working Capital Management and financial performance of Small business
Enterprises. The findings of the study will be highly treated with confidentially and
can be availed on request.
Please kindly answer those questions either in the space provided or tick the right choice.
Thank you for your cooperation.
20yrs-24yrs
25yrs-29yrs
2. Gender
Male
Female
Diploma
Degree
3-5 yrs
35
above 5 yrs
Section B:
No
not sure
If no, who are those responsible for recording funds in the enterprise?
Agree
Not sure
disagree
Strongly disagree
Agree
Not sure
disagree
Strongly disagree
9. How many people have access to the safe were money is kept for this Enterprise.
36
Agree
Not sure
disagree
Strongly disagree
No
not sure
13. There was more loans borrowed by this Enterprise in the year 2010
Strongly agree
Agree
Not sure
Disagree
Strongly disagree
15. Were more sales made by this Enterprise in the year 2010
Yes
No
Not Sure
37
Agree
Not sure
disagree
Strongly disagree
Low
Moderate
High
Very high
18. How do you rate the number of customers of this enterprises compared to similar
enterprises in Kampala
19. This Enterprise is the main supplier to most of the super market in Kampala
Strongly agree
Agree
Not sure
disagree
Strongly disagree
Agree
Not sure
disagree
Strongly disagree
21. How do Current income and expenses recorded in a cash book affect financial
performance of this Enterprise?
38
.
22. Is financial performance of this enterprise hindered by management of funds? Explain
your answer
.
23. How does money recorded in the books of accounts spent by this Enterprise?
.
24. How is accountability to people who access the money safe done in this enterprise?
.
25. How does Purchase order issued for all goods bought affect financial performance
this Enterprise?
.
26. How do receipts verified by owners of the Enterprise reconciled by the expenditures
incurred?
39
Activity
March April
2011
May
2011
Data collection
June
2011
Data processing
Data analysis and presentation
Printing draft copy
July
2011
40
Proposal writing
Stationery
2 reams
8,000
Typing
1 copy @ 5 pages
500 @ page
2,500
Printing
1 copy @ 5 pages
500 @ page
2,500
Photocopying
50 @ page
50,000
Sub total
AMOUNT
(Ug.shs)
16,000
71,000
Dissertation
Printing report
4 copies @ 55 pages
500 @ page
Binding report
4 copies
2,000
2 drafts of report
@ 55 pages
500 @ page
27,500
Transport
21 days
63,000
Lunch
21 days
105,000
private 12 days
84,00
0
Access to
libraries
Miscellaneous
110,000
8,000
5,000
Sub total
402,500
Grand total
473,500
41