EFFECTS OF WORKING CAPITAL MANAGEMENT ON PERFORMANCE OF SELECTED SMALL AND MEDIUM ENTERPRISES IN ADAMAWA STATE, NIGERIA

Abstract

This study examined the effect of working capital management on the performance of selected small and medium enterprises (SMEs) in Adamawa State, Nigeria. The study adopted descriptive research design which allowed the collection of primary data through structured questionnaires. The target population was 677 employees of selected SMEs in Yola North and Gerei LGA. Random sampling technique was used to obtain a sample of 245 employees. Data collected was analyzed using SPSS software. In order to examine the effect which Working Capital Management has on the Performance of the SMEs in the study area, multiple Regression were used. The results of the study indicated that two components of Working Capital Management (cash conversion cycle and inventory management) affect the performance of small and Medium Enterprises positively. The study concluded that managers of SMEs should adopt the correct working capital management practices and identifying critical areas that may improve the performance of SMEs. The study also recommends that SMEs should foster the cash conversion cycle, utilize the value of relationship with suppliers and develop strong alliance, introduce more and elaborate credit terms, Government at all levels to be more involved in financing small and medium enterprises and financial institution such as commercial banks should also be ready to provide loan facilities to SMEs with less stringent conditionality.