Working Capital Management of Smes in Manufacturing Organisation

Abstract

Working capital is the life of any organization. Without working capital, operations tend to come to a standstill. Data has not been conclusive on the impact of working capital management in manufacturing industries. A sample of financial statement from 2010 to 2015 was reviewed for manufacturing firms. After careful use of the OLS regression, the results revealed a significant relationship between the current ratio and the quick ratio as well as the Return on Assets for listed companies. There is need to maintain a level of liquidity in order to maximize profitability. Management should also reduce on the amount held in current assets and use the money for more investment ventures. This will assist in the increase of the yield and reduce on idle cash in the organization.