📄 Abstract
Purpose – This study examines how three working capital management (WCM) practices affect the financial performance of water purification companies in Kismayo, Jubaland State, Somalia, as reported by their staff. The practices are management of the cash conversion cycle (CCC), the accounts receivable period (ARP) and the inventory turnover ratio (ITR). Water supply there is essential, and it is provided by private firms in a fragile post-conflict economy. Design/methodology/approach – A cross-sectional survey was administered to 85 managers and staff drawn from a population of 150 employees. Six five-item Likert scales captured the three WCM practices and three performance dimensions: return on investment (ROI), gross profit margin (GPM) and net profit margin (NPM). The analysis used reliability tests, Pearson correlations and ordinary least squares regression with bootstrapped confidence intervals. It also used hierarchical regression with demographic controls, chi-square tests, comparisons of means and moderation analysis. Findings – All three practices correlate strongly and positively with perceived financial performance (r = 0.767–0.797, p < 0.001). Together they explain 72.4% of its variance (F(3,81) = 70.68, p < 0.001). Each practice has a significant independent effect (CCC: β = 0.286; ARP: β = 0.359; ITR: β = 0.279; all p ≤ 0.006), and these effects survive demographic controls (ΔR² = 0.546). Receivables management has the largest effect and is the only practice that predicts net profit margin independently. Work experience does not significantly moderate the relationship. Research limitations/implications – The evidence rests on perceptions gathered in a single city with a convenience sample and a cross-sectional design. Causal claims are therefore not warranted, and common-method bias cannot be ruled out entirely. Practical implications – Managers should formalise credit and collection routines first, then inventory and cash-cycle monitoring. Policymakers and development partners can support this through financial-management training for essential-service enterprises. Originality/value – This is the first empirical study of WCM in Jubaland's water sector. It adds primary-data evidence on unlisted essential-service firms, which are under-represented in a literature built mainly on listed companies.
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📚 How to Cite:
Aways Mohamed Hussein , WORKING CAPITAL MANAGEMENT PRACTICES AND PERCEIVED FINANCIAL PERFORMANCE: SURVEY EVIDENCE FROM WATER PURIFICATION COMPANIES IN KISMAYO, JUBALAND STATE, SOMALIA , Volume 13 , Issue 9, September 2026, EPRA International Journal of Economics, Business and Management Studies (EBMS) , Pages: 279 - 287 , DOI: https://doi.org/10.36713/epra29088