RELATIONSHIP BETWEEN EFFICIENT CASH MANAGEMENT AND PROFITABILITY OF SMALL SIZED ENTERPRISES IN KISUMU COUNTY, KENYA
INTERNATIONAL JOURNAL OF RESEARCH IN COMMERCE & MANAGEMENT
Efficient cash management is seen as the process of planning and controlling cash flows of a firm and very imperative to small sized enterprises profitabilty.In Kenya small sized enterprises are contributors to economic development by providing employment opportunities and reducing poverty levels. Despite their significance to economic development, small sized enterprises(SSEs) rate of startup is 40% but 60% of them collapse within the first two years of their operations causing retrenchment of human resources, high level of loan defaulters, and inadequate services delivery to the community. This research paper examines the relationship between cash capital management and profitability of small sized enterprises in Kisumu, County, Kenya for 2009 to 2014. The objectives was to determine the effects of management of cash on profitability. The targets population was 10,000 of small sized enterprises and a sample size of 370 small sized enterprises were established by using Krejcie and Morgan’s table. Data was analyzed using descriptive statistics, Pearson’s correlation coefficient and stepwise regression analysis. The correlation analysis performed indicated that there was relatively low degree of positive correlation between efficient cash management and profitability of small sized enterprises. The study recommends that proper financial management education and training should be initiated by government of Kenya.
Working capital management practice, Average collection period,, Inventory turnover, efficient cash management and small sized enterprises