Working Capital Management and Managerial Performance of Selected Real Estate Companies in Mogadishu, Somalia

ABSTRACT 

This study investigates the extent to which working capital management impacts on the managerial performance of the selected real estate companies in Mogadishu, Somalia. To achieve the research purpose, the following research objectives were formulated and these included: to examine the effectiveness of working capital management among the selected real estate companies in Mogadishu; to assess the level of managerial performance in selected real estate companies in Mogadishu; to establish whether there is any significant relationship between working capital management and managerial performance in selected real estate companies in Mogadishu. A descriptive survey design employing both qualitative and quantitative approaches was adopted and applied to illustrate how working capital management affects the managerial performance of the selected real estate companies; the sample size was Ill respondents and these were sampled from total population of 154. Both systematic random and purposive sampling techniques were used to sample respondents. The data collection instruments used included the questionnaire and interview guide. The validity and reliability of the research instruments was determined using content validity index and pretesting. The data collected about the variables was coded and Statistical Package for Social Scientists (SPSS) was used for data entry and analysis. Frequencies and percentages were used to analyze the profile of respondents; mean ranges and standard deviations were used for the items that significantly measured the study variables. Pearson’ correlation of coefficient was used to establish the relationships between working capital management practices and the managerial performance of the selected real estate companies. Multiple regression analysis was used to determine how the predictor variables could explain the dependent variable. This was because there were more than one variable affecting the dependent variable. The research findings indicate that the practices of working capital management practices in the selected companies was moderate (overall mean average of 3.34; SD~ 1.01); this study found out that the level of managerial performance of the real estate companies was moderate (overall mean average of 2.99; SD=1 .13); and finally, this study found out that there is strong, positive and significant relationship between effectiveness in working capital management practices and managerial performance of selected real estate companies (r. value of 0.980 and significant value of 0.000). This study concludes that the working capital management practices of the selected real estate companies is moderate; the managerial performance of the selected real estate companies in Somalia is still moderate; this study finally concludes that any unit improvement in effectiveness in working capital management in the selected real estate companies can lead to improvement in the level of managerial performance of the companies. It was therefore recommended that the management of the selected companies should put emphasis on improving the use of cash, inventories and receivables so as to enhance managerial performance.

TABLE OF CONTENTS

DECLARATION

APPROVAL

DEDICATION

ACKNOWLEDGEMENT iv

ABBREVIATIONS AND ACRONYMS v

TABLE OF CONTENTS vi

LIST OF TABLES AND FIGURES ix

ABSTRACT

CHAPTER ONE 1

INRRODUCTION 1

1.1 Back ground of the study 1

1.1.1 Historical Perspective 1

1.1.2 Theoretical Perspective 3

1.1.3 Conceptual Perspective 3

1.1.4 Contextual Perspective 4

1.2 Problem Statement

1.3 Purpose of the Study 6

1.4 Specific Objectives 6

1.5 Research Questions 6

1.6 Research Flypotheses 6

1.7 The Scope of the Study 6

1.7.1 Geographical scope 6

1.7.2 Content scope 7

1.7.3 Theoretical Scope 7

1.7.4 Time Scope 7

1.8 Significance of the Study 8

1.9 Operational Definitions ofKey Terms 8

CHAPTER TWO 9

LITERATURE REVIEW 9

2.1. Introduction 9

2.2 Theoretical Review 9

2.3 Conceptual Framework 10

2.4 Working Capital Management .10

2.4.1 Cash Management 11

2.4.2 Receivables management 14

2.4.3 Inventory Management 15

2.5 Managerial Performance 17

2.5.1 Profit Level 17

2.5.1 Better Technology 18

2.5.3 Business Growth and Expansion 18

2.6 Relationship between Working Capital Management and Managerial Performance 19

2.7 Summary of the Literature and Literature gaps 21

CHAPTER THREE 23

RESEARCH METHODOLOGY 23

3.1 Introduction 23

3.2 Research Design 23

3.3 Study Population 23

3.4 Sampling Size 24

3.5 Sampling Procedure 24

3.6 Sources of Data and Data Collection Instruments 25

3.6.1 Primary Source of Data 25

3.6.2 Secondary Source Data 26

3.7 Reliability and Validity of Instruments 26

3.8 Data Gathering Procedures 27

3.9. Measurement of Variables 28

3.10. Data Analysis 29

3.11 Ethical Considerations 30

3.12 LimitationlDelirnitations of the study 31

CHAPTER FOUR 32

PRESENTATION, ANALYSIS AND INTERPRETATiON OF DATA 32

4.1 Introduction 32

4.2 Socio-demographic Characteristics of Respondents 32

4.3 Working Capital Management Practices in the Selected Real estate Companies 34

4.4 The Managerial performance of Real estate Companies 38

4.5 Difference in Effectiveness of Working capital Management Practices and Managerial performance among the Selected Real estate Companies 42

4.6 Relationship between Working capital Management and Managerial performance of Selected Real estate Companies 44

CHAPTER FIVE 48

DISCUSSIONS, CONCLUSIONS AND RECOMMENDATIONS 48

5.1 Introduction 48

5.2 Discussion of Findings 48

5.2.1 Working Capital Management Practices in the Selected Real estate Companies 48

5.2.2 The Managerial performance of Real estate Companies 50

5.2.3 Difference in Effectiveness ofWorking capital Management Practices and Managerial performance among the Selected Real estate Companies 52

5.2.4 Relationship between Working capital Management and Managerial performance of Selected Real estate Companies 52

5.3 Conclusions 54

5.3.1 Working Capital Management Practices in the Selected Real estate Companies 54

5.3.2 The Managerial performance of Real estate Companies 55

5.3.3 Relationship between Working capital Management and Managerial performance of Selected Real estate Companies

5.4 Recommendations

5.5 Areas for Further Research 56

REFERENCES 57

APPENDICES 60

APPENDIX 1: QUESTIONNAIRE TO RESPONDENTS 60

APPENDIX 2: INTERVIEW GUIDE 63

APPENDIX 3: PROPOSED BUDGET 64

APPENDIX 4: WORK PLAN 65