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Effects of Working Capital Management on Profitability of NBFIs in Rwanda

Received: 1 November 2022     Accepted: 9 January 2023     Published: 29 May 2023
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Abstract

Working capital management is a key factor in determining a company's financial management. Inefficient or inefficient management of working capital impacts profitability and liquidity. To achieve optimal working capital management, company management must carefully manage the trade-off between profitability and liquidity. The general objective of this study was to determine the Effects of Working Capital Management on Profitability of NBFI in Rwanda. The study adopted Credit theory and Transaction Cost Theory. The study adopted a descriptive research design using both quantitative and qualitative approaches. The study assumed a target population of 96 individuals, a multistage random sample of 38 executives from various categories. Survey data were collected using a structured questionnaire. To test whether there is an impact on the profitability of the NBFIs in Rwanda, the correlation between inventory management policy and profitability and the correlation analysis between lending policy and profitability were used. Working capital has been found to have a significant relationship with profitability. Based on the research findings, it can be concluded that working capital is a positive, significant predictor of profitability. The findings of the study suggested that there is a positive and significant relationship between credit policy and profitability. A positive significant linear relationship between inventory control policies and profitability of NBFI in Rwanda was observed. The NBFI financial managers should regularly review their credit policies to ensure they are optimal. NBFI's finance managers should take precautions to help them maintain optimal inventory levels for both raw materials and finished goods.

Published in Journal of Finance and Accounting (Volume 11, Issue 3)
DOI 10.11648/j.jfa.20231103.13
Page(s) 79-86
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2023. Published by Science Publishing Group

Keywords

Working Profitability, Non-Bank Financial Institutions, Rwanda

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Cite This Article
  • APA Style

    Wilson Bashaija. (2023). Effects of Working Capital Management on Profitability of NBFIs in Rwanda. Journal of Finance and Accounting, 11(3), 79-86. https://doi.org/10.11648/j.jfa.20231103.13

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    ACS Style

    Wilson Bashaija. Effects of Working Capital Management on Profitability of NBFIs in Rwanda. J. Finance Account. 2023, 11(3), 79-86. doi: 10.11648/j.jfa.20231103.13

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    AMA Style

    Wilson Bashaija. Effects of Working Capital Management on Profitability of NBFIs in Rwanda. J Finance Account. 2023;11(3):79-86. doi: 10.11648/j.jfa.20231103.13

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  • @article{10.11648/j.jfa.20231103.13,
      author = {Wilson Bashaija},
      title = {Effects of Working Capital Management on Profitability of NBFIs in Rwanda},
      journal = {Journal of Finance and Accounting},
      volume = {11},
      number = {3},
      pages = {79-86},
      doi = {10.11648/j.jfa.20231103.13},
      url = {https://doi.org/10.11648/j.jfa.20231103.13},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20231103.13},
      abstract = {Working capital management is a key factor in determining a company's financial management. Inefficient or inefficient management of working capital impacts profitability and liquidity. To achieve optimal working capital management, company management must carefully manage the trade-off between profitability and liquidity. The general objective of this study was to determine the Effects of Working Capital Management on Profitability of NBFI in Rwanda. The study adopted Credit theory and Transaction Cost Theory. The study adopted a descriptive research design using both quantitative and qualitative approaches. The study assumed a target population of 96 individuals, a multistage random sample of 38 executives from various categories. Survey data were collected using a structured questionnaire. To test whether there is an impact on the profitability of the NBFIs in Rwanda, the correlation between inventory management policy and profitability and the correlation analysis between lending policy and profitability were used. Working capital has been found to have a significant relationship with profitability. Based on the research findings, it can be concluded that working capital is a positive, significant predictor of profitability. The findings of the study suggested that there is a positive and significant relationship between credit policy and profitability. A positive significant linear relationship between inventory control policies and profitability of NBFI in Rwanda was observed. The NBFI financial managers should regularly review their credit policies to ensure they are optimal. NBFI's finance managers should take precautions to help them maintain optimal inventory levels for both raw materials and finished goods.},
     year = {2023}
    }
    

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  • TY  - JOUR
    T1  - Effects of Working Capital Management on Profitability of NBFIs in Rwanda
    AU  - Wilson Bashaija
    Y1  - 2023/05/29
    PY  - 2023
    N1  - https://doi.org/10.11648/j.jfa.20231103.13
    DO  - 10.11648/j.jfa.20231103.13
    T2  - Journal of Finance and Accounting
    JF  - Journal of Finance and Accounting
    JO  - Journal of Finance and Accounting
    SP  - 79
    EP  - 86
    PB  - Science Publishing Group
    SN  - 2330-7323
    UR  - https://doi.org/10.11648/j.jfa.20231103.13
    AB  - Working capital management is a key factor in determining a company's financial management. Inefficient or inefficient management of working capital impacts profitability and liquidity. To achieve optimal working capital management, company management must carefully manage the trade-off between profitability and liquidity. The general objective of this study was to determine the Effects of Working Capital Management on Profitability of NBFI in Rwanda. The study adopted Credit theory and Transaction Cost Theory. The study adopted a descriptive research design using both quantitative and qualitative approaches. The study assumed a target population of 96 individuals, a multistage random sample of 38 executives from various categories. Survey data were collected using a structured questionnaire. To test whether there is an impact on the profitability of the NBFIs in Rwanda, the correlation between inventory management policy and profitability and the correlation analysis between lending policy and profitability were used. Working capital has been found to have a significant relationship with profitability. Based on the research findings, it can be concluded that working capital is a positive, significant predictor of profitability. The findings of the study suggested that there is a positive and significant relationship between credit policy and profitability. A positive significant linear relationship between inventory control policies and profitability of NBFI in Rwanda was observed. The NBFI financial managers should regularly review their credit policies to ensure they are optimal. NBFI's finance managers should take precautions to help them maintain optimal inventory levels for both raw materials and finished goods.
    VL  - 11
    IS  - 3
    ER  - 

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Author Information
  • Department of Finance and Accounting, University of Rwanda, Kigali, Rwanda

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