Accounting and Finance

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Subject: search.filters.subject.Working capital management

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    The effect of working capital management on profitability of listed manufacturing companies in Dar es salaam Stock Exchange (DSE) Tanzania
    (Mzumbe Unversity, 2016) Shekalaghe, Kasimu
    Working capital management (WCM) has effects on profitability of firms. The objective of this study is to examine the effect of WCM on the profitability of listed manufacturing companies in Dar es Salaam stock exchange Tanzania. The quantitative research design was applied on six (6) targeted listed manufacturing companies using panel data analysis for the period of ten (10) years from 2005 to 2014.Descriptive Multiple regression and correlation analysis were applied to examine the relationships between components WCM and the Gross Profit (GP). GP is used as dependent variable, while Inventory turnover in days (INVTID), Average collection period (ACP), Average payment period (APP) and cash conversion cycle (CCC) as independent variables and; Firm size and current ratio (CR) as control variables. For the purpose of understanding the result of this study the combination of all listed manufacturing companies was term as INDUSTRY. Results reveal that industry correlation between ACP, SLn, CR and GP are in right direction and highly significant, and the correlation between INVTID, CCC, APP and GP are significant but in opposite direction. Regression result showed that there is weak positive relationship between APP, CCC and GP of the industry and strong significant positive relationship between INVTID, SLn, CR and GP further more there is insignificant negative relationship between ACP and GP of the industry. The study end by concluding that further investigation is to be taken for WCM component with unexpected result. Managers have to take measures for effective and efficiency utilization of WC in order to create shareholder’s wealth and firm value. Subsequently the analysis of individual listed manufacturing campaniles was made, the correlation and regression analysis shows mixed results, except for SLn and CR reveals strong significant relationship with GP all most in all companies selected in this study. From this study it is recommended that managers should focus on reducing CCC, INVTID and collect cash from credit customers as soon as possible.
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    The impact of working capital management on profitability of listed cement companies in Tanzania: A comparative study of Tanga Cement Company Ltd and Tanzania Portland Cement Company Ltd.
    (Mzumbe University, 2015) Lyimo, Evance Wiliam
    Working capital management is needed for day to day operations of a business firm. Working capital management involves administration of the most liquidity resources of the business firms which include cash and cash equivalents, inventories and trade and other receivables. Adequate management of working capital will resulted in achievement of maximum gross operating profit thus maintaining liquidity position and maximizing shareholders wealth which is the central tendency of goal of any firm. Unlikely, insufficient working capital administration will result into illiquidity due to the fact that respective company won‟t able to generate enough GOP to enhance liquidity position. Business firms required to hold appropriate working capital so as to trade-off between liquidity and bankruptcy. Companies can use working capital management as an approach or tool to influence GOP. This paper investigated the impact of working capital management on profitability of cement companies registered in Tanzania. The study based on two companies only due to the fact that at the time of conducting research there were only two listed companies. The study covers a period of 8 years from year 2006 to 2013. Descriptive statistics, correlation and multiple regressions analyses are employed to explore the relationship between working capital components and GOP. The correlation analysis for TCCCL established that GOP is negatively related with APP against expected and ITID as expected. While correlation and multiple regression analyses found that GOP is negatively related with ACP as expected and positive related with CCC against expected. Regression for TPCCL established that GOP was negatively related with ACP as expected and positively related with ITID against expected. Also GOP positively related with APP (as expected) while negatively related with CCC (as expected). This commented that profitability of Cement Company depends on effective working capital management in order to trade off between liquidity and bankruptcy. The study is therefore recommended that for those working capital components bring unpredicted results, efficient in supervision is needed to improve. Similarly for those insignificant relationships care is required to advance from respective areas.
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    Influence of working capital management in organization performance: A case study of Zanzibar Social Security Fund (ZSSF)
    (Mzumbe University, 2013) Hamad, Akida
    Working capital management has lately been a hot topic since the financial crisis of the late 2000’C, Companies search for liquidity and operational efficiency through minimizing their investment in working capital. How can influence of working capital management affect organization performance? This has been studies in this thesis. Specifically, the study was set in order to meet three objectives, namely; to analyze trend of Net Working capital at Zanzibar Social Security Fund, to assess the efficient of Net Working capital at ZSSF and to examine the contribution of net working capital to organization performance at ZSSF. To achieve these objectives, the study used a sample of 50 respondents who were randomly selected. Data collected by use of questionnaires, interviews, observation and documentary reviews were computed and analyzed by using SPSS computer software and Excel program. Tables and figures were used to helps the presentation of the findings. The efficient of working capital management can be determined by the working capital components such as cash, account receivables, account payables, inventories and other receivables. By testing five independent variables with organization performance by reducing cash, inventory and efficiency management of other components. The main findings indicate that ZSSF consider working capital management an important issue, yet some challenges appeared on efficiency on the payment of monthly pensionable amount to its pensioners. It is evident that the respondents placed greater emphasis or importance on the analysis of trend of net working capital, assessing the efficient of net working capital and contribution of net working capital to organization performance. Some effort is made to manage cash, accounts receivable, inventory and accounts payable and other receivables independently of each other, however given the theory of working capital management; there may be room for improvement regarding the strategies, tactics and techniques used to manage these components. Furthermore, the findings suggest that working capital management is also strategic as it impacts on the liquidity, solvency/bankruptcy, efficiency, profitability and shareholder wealth maximization of the business. In light of the findings, it was recommended that ZSSF should improve the process of payments to its members and should ensure that benefits are paid timely and to the right person. Also, the comparative study of the research should be conducted in order to assess the influence of working capital management on the performance of various pension funds operated in Tanzania. As part of this study a further area for research should be empirical investigations into the impact of working capital on company performance specifically in the service sector industry, and here the case study approach could be considered.