Working Capital Management and Performance of Business Firms in Rwanda: A Case of Sulforwanda Industries.

ABSTRACT The study focused on the working capital management and performance of business firms in Rwanda taking Sulforwanda industries as the case study. The objectives of the study were to examine the impact of receivables, payable and inventories conversion on the performance of Sulforwanda industries, to establish the level of performance of Sulforwanda industries, evaluate working capital management policies of Sulforwanda industries and its impact on the firm's performance. The research reviewed the existing literature related to the study. In the structure to achieve the study objectives, both primary and secondary data were collected. Study adopted qualitative approach. Both random and purposive sampling techniques were used to obtain a sample of 250 respondents from a total population of 665 employees of Sulforwanda using Slovin's technique of sample computation. The study revealed that working capital management conversion has great impact on firm's performance, the analysis of the performance of Sulforwanda revealed that it at low level. The analysis of the liquidity ratios showed that firm has no sufficient liquidity to finance its short term obligations, the study noted that the firm depends on external sources of funds, the study also indicated that firm doesn't have policies and ·procedures related to the management of account receivables, payables and inventory that would enable the firm to improve its performance. The study further revealed that there is a strong relation between working capital management and firm's performance as evidenced by 100% of the respondents. To improve working capital management, the study recommended Sulforwanda industries should establish appropriate policies pertaining to the management of payables, payables and inventory and where necessary revise them to match it with the changing business environment. The management should adopt appropriate methods related to inventory management in order to avoid stock runs out or idle stock. The management should also always be monitor the cash inflows to avoid surplus cash or cash deficit and improve performance by investing the returns. Finally, the study suggested areas for further research.