Financial Management Practices and Financial Performance of Service Companies in Somalia

Abstract

The objective of this study was to witness the effect of the financial management practice on the financial performance services companies in Somalia. This study viewed the effect of financial management practice of all the mechanisms of financial management those were specifically; working capital, investment decision and financial decision of the services companies in the Mogadishu area. The study employed explanatory and descriptive research design. A sample of 145 respondents was selected using the stratified sampling technique.. The data collected through a cross sectional questionnaire.The findings discovered that Working capital, investment decision, are significant determinants of financial performance of the services companies in Somalia. The findings indicated that the most important variable in the model was investment decision (β = 0.544). This was followed by working capital management (β = 0.419), while financial decisions were (β= -0.010.), these showed rejected. The study, therefore, recommends that services companies in Mogadishu needed to have Working capital management policy and investment decision policy which were impacted positively on the overall financial performance.

Keywords: Working capital management, Investment decision and financial decision and financial performance.

DOI: 10.7176/RJFA/10-4-07