MJAMR

Working Capital Management and Financial Performance of Secondhand Car Trading Companies in Kampala District, Uganda

Moses Asaba


Abstract

The study examined 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 was by Cronbach alpha coefficient. This study further applied confirmatory factor analysis to identify the measures which were perceived as good measures for the constructs. The study obtained Cronbach’s alpha coefficient to check for the internal consistency of the scales. Out of 242 second hand car trading companies, the study obtained responses from 192, giving a response rate of 79.3%. The attained response rate is above the minimum acceptable coverage of 70% for considering the results fit for generalization. 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. 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 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.

Keywords

Working Capital Management Financial Performance Risk Assessment Secondhand Car
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Moses Asaba (2023). Working Capital Management and Financial Performance of Secondhand Car Trading Companies in Kampala District, Uganda. Metropolitan Journal of Academic Multidisciplinary Research, 2(11). https://journals.miu.ac.ug/pages/article.php?article_id=1500

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