Working Capital Management Practices And Financial Performance

Small Scale Enterprises (SSEs) play a critical role in the creation of jobs and the promotion of an enterprise culture and are thus acknowledged as significant contributors to economic growth in a majority of developing economies. Despite their significance, past statistics indicate that 40% of the start-ups fail by year 2 and at least 60% close their doors by year 4. Also, recent studies have shown that up to 50% of those that continue to operate have a deteriorating performance and hardly evolve further than the ‘small’ level. Poor working capital management practices have been credited as one of the major cause of these failures. This book provides an empirical analysis of the working capital management practices of SSEs and demonstrates that increased efficiency in working capital management leads to higher financial performance hence emphasizes the need for SSEs to adopt efficient working capital management practices as a strategy to improve financial performance and survive in the uncertain business environment