Relevance of Working Capital on Organisational Performance: Study of Selected Quoted Manufacturing Companies

Abstract

The study focuses primarily on the relevance of working capital management on organisation performance. The variable considered in this study were working capital management and organisation performance  which were represented with proxies such as profit after tax and   working capital ratio. These proxies were analysed using multiple regression analyses in Statistical Packages for Social Sciences (SPSS) version 20. The result of the analysis reveal that there is significant relationship between working capital management and organisation performance, because their proxies  had a P- value (i.e. 0.002) that was lower than the alpha value of 0.05 specified in SPSS. The study, thus, recommends that policy maker (i.e. the management) should ensure adequate control on working capital management so as to improve the organisation performance because both of them have significant influence on each other.

Keywords: Working capital, organisations, profitability, current asset, current liability