Impact Of Working Capital Management On Profitability Of Small And Medium Scale Enterprises (smes) In Addis Ababa (the Case Of Nifas-silk-lafto And Kirkos Sub Cities

Small and medium enterprises occupy a prominent position in the development agenda of manyrndeveloping countries like Ethiopia. The number of SMEs in Ethiopia is steadily growing. But,rnmuch more important than their number is their current status, stage and pace of development.rnDespite the tremendous increase in number of SMEs, little research exists that examines workingrncapital management of small and medium enterprises (SMEs) in developing countries, especiallyrnin Ethiopia.rnThe purpose of the study is to identify the impact of working capital management on thernpelformance of the SMEs in Nifas silk and Kirkos sub cities and to give recommendations basedrnon the problems. In doing so both Primary and secondmy data was collected from 30 SMEs inrnthose Sub cities of the capital city; Addis Ababa. The primary data was collected through the usernof questionnaires and secondary data was gathered from the financial statements of thernenterprises. The population of the study includes all SME's operating within organization forrnwomen in self employment (WISE). Data analysis was done using descriptive statistics andrnquantitative methods (correlation and regression).rnThe findings of the paper suggest that working capital is negatively affected by the time periodrnrequired by the enterprises to receive their debts, pay their bills and collect cash. Beside that thernfinancial leverage, size and current ratio of those SME's under study have impact on thernavailability of adequate working capital requirements.

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