Effect of working capital management practices on financial performance and competitivenes of small and medium-sized enterprises in the kumasi metropolis.

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The study identifies the effect of three major constructs of working capital management (cash, receivables and inventory management practices) on the financial performance and competitiveness of small and medium-sized enterprises (SME) in the Central Business District of the Kumasi Metropolis. The study uses data gathered from hundred (100) smes in the Central Business District via the administration of structured questionnaires. The Structural Equation Modeling (SEM) is employed in the testing of the four hypotheses of the study. Results of the data analysis indicates that a high conduct of cash, receivables and inventory management practices result in a better SME financial performance and also a strong positive relationship exists between financial performance and competitiveness. The study is aimed at drawing the attention of owners/ managers and other stakeholders of smes on the need to concentrate on an efficient cash, receivables and inventory management practices in order to improve on their financial performance and competitiveness in the business environment. When SME financial performance and competitiveness are improved across sectors, the vital issue of SME sustainability will also be improved. From the outcome of the study, it is recommended that the relevant state agencies in charge of small businesses organize educational programmes to train owners and managers of smes on the rudiments of basic accounting record and book-keeping. SME owners and managers who lack knowledge and expertise in basic accounting can equally outsource for the services of a professional to inculcate and maintain efficient working capital management practices in their business.
A thesis submitted to the department of accounting and finance of the Kwame Nkrumah university of science and technology school of business, in partial fulfilment of the requirements for the award of the degree of master of business administration (accounting option)