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Working Capital Management Cycle and Profitability of Household Supermarkets in Kenya: A Literature Review

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  • Alice Ruguru Ngari

    (Postgraduate Student at Mt. Kenya University, Kenya)

  • Charles Guandaru Kamau, PhD

    (Lecturer at Technical University of Mombasa, Kenya)

Abstract

Working capital management involves management of short-term assets and liabilities. The purpose of this study was to examine the working capital management cycle in relation to profitability of household supermarket in Kenya. The objectives of the study were to evaluate the receivable conversion period, payable Deferral period, and inventory conversion period on the profitability of Household supermarket in Kenya. This study was guided by Operating Cycle Theory. The study used literature review methodology. The research concluded that firms that manage working capital efficiently enjoy the benefit of long survival in business, and that shareholders’ value can be raised by reducing account receivable days, by hiking stocks to a sensible level, by taking long to pay suppliers yet ensuring good terms and by minimizing the CCC days.

Suggested Citation

  • Alice Ruguru Ngari & Charles Guandaru Kamau, PhD, 2021. "Working Capital Management Cycle and Profitability of Household Supermarkets in Kenya: A Literature Review," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(08), pages 711-714, August.
    • Handle: RePEc:bcp:journl:v:5:y:2021:i:08:p:711-714
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    References listed on IDEAS

    as
    1. Yusuf Aminu, 2012. "An Analysis of Proposed Framework on Impact of Working Capital Management on the Profitability of Selected Manufacturing Companies Listed on the Nigerian Stock Exchange," Journal of Economics and Behavioral Studies, AMH International, vol. 4(12), pages 730-736.
    2. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3‐4), pages 573-588, April.
    3. Marc Deloof, 2003. "Does Working Capital Management Affect Profitability of Belgian Firms?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3-4), pages 573-588.
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