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WORKING CAPITAL MANAGEMENT, RISK MANAGEMENT AND FINANCIAL PERFORMANCE OF SECONDHAND CAR TRADING COMPANIES IN KAMPALA DISTRICT, UGANDA (issue 8)

The study examined the relationship between working capital management, risk management and financial
performance of secondhand car trading companies in Kampala. The objectives of the study were to: assess the
relationship between working capital management and financial performance; relationship between risk
management and financial performance; relationship between working capital management and risk management;
examine the influence of working capital management, risk management and financial performance; and assess the
mediating effect of risk management in the relationship between working capital management and financial
performance. The study applied a cross-sectional research design and a quantitative research approach. The study
selected a sample of 242 secondhand car trading companies from 628 by simple random sampling. A structured
questionnaire was used to obtain data from either an accountant or business owner. Validity of the instrument was
by expert judgment while reliability, Cronbach alpha coefficient. Data analysis was carried out using SPSS (v20) to
extract frequency tables, descriptive and inferential statistics for presentation and interpretation. The study found a
positive relationship between working capital management and financial performance; positive relationship between
risk management and financial performance; and positive relationship between working capital management and
risk management. Regressed results obtained that jointly working capital management and risk management are
significant predictors of financial performance. Risk management was found as the better predictor. The study
further obtained a significant partial mediation of risk management in the relationship between working capital
management and financial performance. The study concluded that risk management and working capital
management are among the key factors that affect financial performance among secondhand car trading companies.
The study also observed secondhand car trading companies would financially perform much better if concentration
is directed towards risk management. Accordingly, the study recommends; risk assessment, risk mitigation, risk
monitoring and control.

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