Analysis of the Impact of Working capital management practices on financial performance: A study of hotels in Kampala under UHOA

Abstract

This study aimed at establishing the relationship between Working Capital Management (WCM) and its impact on the Financial Performance of Hotels in Kampala. The main study objective was to establish the relationship between working capital management and financial performance of Hotels in Kampala. The study is based on a population of 48 hotels within Kampala District that were registered with Uganda Hotel Owners’ Association at the time of the study. A cross section data design was used. A sample size of 45 hotels was used, targeting 225 respondents and the response was 210. The study used the questionnaire to collect data. Content validity index was used (CVI) and piloted (10%) of the tools. The data was processed using SPSS. The study revealed that there is a significant positive relationship between working capital management and financial performance of hotels in Kampala. Working Capital Management emerged to be a good predictor of financial performance in Hotels. The study concludes that, for Hotels to achieve improved financial performance, aspects of working capital management (including Procurement and Inventory Management, Debtor Management, Cash Management, Accounts Payable) require adequate attention.