EFFECT OF WORKING CAPITAL MANAGEMENT ON FINANCIAL SUSTAINABILITY OF GOVERNMENT OWNED ENTITIES IN THE MINISTRY OF AGRICULTURE, LIVESTOCK AND FISHERIES (MOALF), KENYA
Abstract
Financial sustainability is prime to any organization; be it profit making or nonprofit making and its eminence cannot be over-emphasized. Even though various studies have been done on financial sustainability, limited research have been carried out on financial sustainability of GoEs hence there is limited information on GoEs in the MOALF. This study sought to identify financial sustainability basics. The study focused on investigating the “effect of working capital management on financial sustainability of government owned entities in the ministry of agriculture, livestock and fisheries (moalf), Kenya. A causal research design was adopted and with 27 organizations responding positively, giving a sample size of 134. The study used both primary and secondary sources of data. The secondary data involved review of published information on Financial Statements of GoEs in MOALF. Data was obtained for a period of 7 years from 2009/2010 to 2014/15 financial years and analyzed using SPPS version 21 statistical software. From the study it was evident that, management of working capital was key factor that influenced financial sustainability of the GoEs. It was positively correlated to financial sustainability. The study recommended that prioritized resource utilization should be given more emphasis as a means to ensure that institutional goals are set in line with the availability of funds. There should be proper projects evaluation and prioritization before allocation of resources is done to the most profitable project, bottom up resource management should be adopted, thereby keeping expenditure within the approved levels is also key. GoEs should endeavour to adopt hybrid model of management that incorporates both public and private interface. Policies on investment should be developed, Investment in green finance and adoption of climatic finance that significantly reduce effects on the environment enhancing sustainability. They should also adopt a holistic evaluation model not limited to financial evaluation through innovative accounting that encompassing the key goals and objectives of their existence and adoption of risk assessment framework. The Ministry should set limits with the set frameworks for the Key ratios used to measure Financial Sustainability.
Key Words: Working Capital Ratio, Working Capital Management, Working Capital, Financial Sustainability, Performance, Firm’s Growth, Organizational, Commitment, Profitability, State/Government Owned Enterprises, Integrated Reporting
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