WORKING CAPITAL MANAGEMENT AND THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES IN KWARA STATE

Working capital can be considered as source of existence for all types of organizations, whether profit or nonprofit organizations, therefore, it is a vital component for any profit making organizations for it influences operational level and sales volume. The purpose of this study was to assess the influence of Working Capital Management Practices on the Performance of SMEs in Kwara State. This study was based on three objectives: To determine the relationship between Cash Management Practice and the effectiveness of Small and Medium Scale Enterprises in Kwara State. To examine the impact of Trade Credit Management Practice on the profitability of Small and Medium Scale Enterprises in Kwara State. To investigate the significant relationship between Inventory Management Practices and the productivity of Small and Medium Scale Enterprises in Kwara State. The population of the study therefore was 200. The study adopted Taro Yamane formula to determine a sample of 133. Primary data was sourced using structured questionnaire from the respondents. The method of data analysis was regression analysis with the aid of Statistical Package for Social Science (SPSS) version 26.The findings revealed that, there is a significance relationship between cash management practice and the growth of small and medium scale enterprisewith computed p-value less than the significance level (p-value 0.027< ? 0.05),there is a significance relationship between Trade Credit Management Practice and the profitability of small and medium scale enterprise,with computed p-value less than the significance level (p-value 0.000< ? 0.05)finally, inventory management practice has impact on the productivity of small and medium scale enterprisewith computed p-value less than the significance level (p-value 0.000< ? 0.05). The study conclude that; Efficient cash management involves the determination of the optimal cash to hold by considering the trade-off between the opportunity cost of holding too much cash and the trading cost of holding too little which together with other elements of Working Capital lead to the growth, sustenance and prosperity of SMEs. The study recommends that;the managers, owners and accountants of the SMEs must acquire knowledge on how to effectively manage their working capital. This will sharpen their skills on working capital management and eventually leads to improved performance

1 19 Jan, 2024

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