Determinants of Working Capital Requirements Listed Companies in East Africa: An Empirical Study Using Generalised Method of Movements
| dc.contributor.author | Sumawe, Sadiki | |
| dc.contributor.author | Magoti, Lucas | |
| dc.date.accessioned | 2025-11-18T12:32:43Z | |
| dc.date.available | 2025-11-18T12:32:43Z | |
| dc.date.issued | 2025-06-30 | |
| dc.description.abstract | Effective working capital management is essential to a company’s survival. Working capital management helps managers in the value creation of the company and prevents the possibility of insolvency. This leads managers and researchers to make an effort to identify variables that affect working capital management. The main focus of this study is to examine the determinants of working capital requirements of non-financial firms listed in East African stock markets. Working capital requirement as a dependent variable was presented by the ratio of current assets less current liabilities over total assets and cash conversion cycle. However, the independent variable was represented by return on assets, sales growth, firm size, leverage and operating cash flow, while the country's gross domestic product growth rate was used as a control variable. For the company to be financially successful, it depends much on how financial managers use their skills to ensure that management of working capital is maintained at an optimal balance. The study used both a descriptive and a quantitative research design. Listed non-financial companies in East Africa, covering the period of 8 years from 2016 to 2023, were selected to represent the sample. Data analysis was done by eView12 using the panel generalised method of movement to establish the relationship between dependent and independent variables. This study concluded that there is a significant positive influence of return on assets, growth, firm size and operating cash flow on working capital requirement. This indicates that if the firm wants to grow and improve profitability it must increase the level of working capital. Furthermore, leverage and firm size were revealed to have a negative and significant influence on working capital requirement. Then, if the firm is highly geared, it leads to a reduction in the level of working capital. Moreover, GDP growth rate impacts working capital requirement positively, meaning that when the country's GDP increases, the company demands more cash to finance their working capital. | |
| dc.identifier.issn | 2591-6815 | |
| dc.identifier.uri | https://repository.tia.ac.tz/handle/123456789/248 | |
| dc.publisher | African Journal of Accounting and Social Science Studies (AJASSS) | |
| dc.relation.ispartofseries | Vol. 7; Issue 1 | |
| dc.subject | Working capital | |
| dc.subject | growth | |
| dc.subject | leverage | |
| dc.subject | return on assets | |
| dc.subject | listed nonfinancial firm | |
| dc.title | Determinants of Working Capital Requirements Listed Companies in East Africa: An Empirical Study Using Generalised Method of Movements | |
| dc.type | Article |