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The purpose of this research is to examine the impact of Working Capital Management on Firms performance. A sample of 20 Firms from three countries of East Africa (Tanzania, Kenya and Uganda) was taken. Working Capital Management is measured using Cash Conversion Cycle (CCC), Average inventory period (AIP), Average collection period (ACP) and average payable period (APP) and firm’s performance as return on assets (ROA). Additionally, age, size, leverage, financial crisis, market book value and liquidity as control variables to estimate robust outcomes. The study used a case study design and 20 listed manufacturing firms were sampled. Secondary data from published financial statements for a period of 14 years (2001-2014). After controlling aforesaid indicators, it was found that, there exist an adverse impact of working capital on firm’s performance (ROA). These outcomes specify that extensive recovery periods affect fund availability and supply of material, which consequently impact on firm operations and profitability. The results demonstrate that working capital management plays a role in increasing the wealth of the shareholders by making a firm more profitable through shortening CCC. Therefore, manufacturing firms should seriously manage their working capital to improve their performance. |
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