Working Capital Management Efficiency: an empirical Survey on Tanzanian Universities

Lemeri, Mary F.
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Strathmore University
Efficient working capital management is one of the pre-conditions for the continued existence of organizations. This study examined the efficiency of working capital management (WCM) in Tanzanian universities. A sample of 8 out of 31 universities in Tanzania for a period from year 2005 to 2009 was studied. To measure the efficiency of WCM, three index values namely performance, utilization, and efficiency indices were computed. Different variables affecting WCM efficiency including return on assets (ROA), earnings before interest and tax (EBIT), number of computers and computer software were studied. Further, university sizes, growth in number of students, and type of university (Government or Private) were used as control variables. The data were analyzed using descriptive statistics, Pearson's correlation and regression. The findings of the study indicate that Tanzanian universities have managed their working capital satisfactorily. The result shows that there is a positive relationship between WCM efficiency and university's earnings. This means that the higher the earnings, the greater the measure of efficiency in working capital management. The study also found a positive relationship between number of computers and working capital management efficiency. It implies that an increase in number of computers with proportion to the number of finance staff lead to the efficiency in WCM.
Partial Fulfillment of the Requirements for the Degree of Master of Commerce
Working capital, management, Tanzanian universities
HF5550.T3.L46 2011