CONTRIBUTION OF WORKING CAPITAL MANAGEMENT TO THE PERFORMANCE OF MANUFACTURING COMPANIES. A CASE STUDY OF BRALIRWA PERIOD: 2019-2022

Abstract

The general objective of the study was assessed the impact of working capital management on the performance of manufacturing companies in Rwanda The specific objectives of the study were to analyze effectiveness of working capital in BRALIRWA PLC. To verify whether effective Working capital management contribute to BRALIRWA PLC Performance The findings in table 4.5 have shown that the Accounts Receivable Turnover Ratio during the period of the study as follows; 15.4 times in 2019; 9.8 times in 2020; 22.0 times in 2021 and 10.98 times in 2022. BRALIRWA PLC in 2019 as well as in 2021 recorded a higher ratio and this means that BRALIRWA PLC is more favorable to business and collecting its receivables efficiently but in2020 and 2022 there is a shortage of accounts turnover ratio shows that the time interval between the receipt of money and credit sales and is high. There is always a risk of liquidity crunch for the working capital requirements in order to help BRALIRWA PLC to operate their activities and meet short- term obligation. That was impact of working capital. The findings in table 4.8 show during the period of the study as follows; 2019 is 163 days, 2020 is 165 days; in 2021 is 152 days and in 2022 is 224 days. It means that these days, the BRALIRWA PLC takes from 2019to 2022 pay its creditors. A shorter payment period indicates prompt payments to creditors. Like accounts payable turnover ratio, the payment period also indicates the creditworthiness of the company . Return on assets measures how efficiently profits are being xiii generated from the assets employed. From the table 4,12, the results show that for Rwf 100 that BRALIRWAPLCinvestedinassets,ithadgeneratedincomeonthefollowingpercentages: 0.9% ,7%, 15.05% and 14.4% respectively in 2019 , 2020 , 2021 and 2022. The return on equity ratio measures the percentages of profit earned on common stockholders’ investment in the company.this shows that the management of working capital led to the increase of profits in BRALIRWA the financial analysis provided therefore useful information for decision making.