THE CONTRIBUTION OF WORKING CAPITAL MANAGEMENT ON THE FINANCIALPERFORMANCE OF MANUFACTURING COMPANIES. A CASE STUDY OF BRALIRWA

Abstract

The general objective of the study was to assess the impact of working capital on the performance of manufacturing companies in Rwanda. The specific objectives of the study were . To determine the trend of working capital variables in BRALIRWA from 2019 to 2022. To analyze the trend of Profitability in BRALIRWA from 2018 to 2022. To assess the impact of working capital variables on profitability in BRALIRWA from 2019 to 2022 As shown in Table 4.3 the respondents agreed at a 4.46 mean that their firms receive credit facilities from their suppliers and that the payment period allowed to the firm by its suppliers is reasonable (4.94 mean). The lowest scores were given to the past debts of the firm being waived off by the suppliers (2.70 mean) implying that these firm have to pay their debts. Dominy and Kempson (2003) argue that despite a firm having problems in paying creditors due to unavoidable circumstances it must ensure that the debt is paid so that good relationship continues with the creditor. The mean score of all the responses was 3.05 on a scale of one to five. This shows that a few respondents agreed with the statements in support of accounts payable practices implying accounts payable practices are not very good. Utilizing the relationship with the suppliers is a sound objective that should always be highlighted as important just like optimal levels of inventories and ideal credit policies (Hill &Sartoris, 1992). Accounts payable should be optimally used by firm. Sound management of suppliers’ credit requires current up to date information on account of aging of payables to ensure proper payments (Helfert, 2003). Therefore the firm needs to be trained on how to take advantage of account payable practices so as to increase on their effectiveness.