EFFECTS OF WORKING CAPITAL MANAGEMENT ON THE PERFORMANCE OF RETAIL MOBILE PHONE SHOPS: A CASE OF NYAMAGANA DISTRICT, MWANZA CITY
Purpose of the Study: The study aimed to examine the effect of working capital management components receivable days, inventory days, and payables days on the growth and performance of retail mobile phone shops in Nyamagana District, Mwanza. It sought to determine how effective management of these financial elements influences profitability, liquidity, and operational efficiency in a dynamic retail environment.
Design/Methodology: A correlational research design guided the study, adopting a positivist philosophy and a quantitative approach. Data were collected from all 70 registered retail mobile phone shops in the district using structured, closed-ended questionnaires. Inferential statistical tools, including Pearson’s correlation and multiple regression analysis, were employed to assess the relationships and impacts of working capital components on business performance.
Findings: The study revealed a negative correlation and effect between receivable days and business performance (r = -0.702, B = -0.132 p = 0.05), a positive and significant effect of inventory days on growth (r= 0.233, B = 0.228, p = 0.002), and a strong positive relationship between payables days and performance (r = 0.798; B = 0.823, p < 0.001). Payables management emerged as the most influential predictor of growth, underscoring the importance of extending payment periods strategically to enhance liquidity and operational stability. All variables have positive influence on the growth of retail mobile phone shops.
Originality: The study contributes to existing literature by focusing specifically on retail mobile phone shops in a resource constrained African urban setting, providing context-specific insights into how working capital components affect business growth beyond traditional profitability metrics.
Practical Implications: Retail mobile phone shop owners and managers can improve operational efficiency, liquidity, and growth by strategically managing payables, optimizing inventory turnover, and maintaining effective receivables practices. The study highlights the value of integrated working capital strategies for small retail enterprises.
Social Implications: Enhanced financial performance and growth of retail mobile phone shops can improve local employment, support small-scale entrepreneurship, and strengthen the economic resilience of the Nyamagana District community.
Keywords: Working Capital Management, Receivable Days, Inventory Days, Payables Days, Retail Mobile Shops, Business Performance, Cash Conversion Cycle.
