Influence of WCM on financial performance of private health Care institutions in Isiolo county, Kenya

Abstract

The effective management of working capital is a cornerstone for business success. Within the retail sector, lapses in financial oversight can lead to challenges like rising bad debts and escalating inventory expenses, thereby negatively impacting a company's fiscal health. In Isiolo County, Kenya, inadequate working capital governance hasn't just diminished financial outcomes but also led to the shutdown of several private healthcare entities. This research aimed to investigate the impact of WCM on the financial stability of private healthcare institutions in Isiolo County. The investigation specifically analyzed the effects of cash governance, management of payables and receivables, and inventory control on financial results. The fundamental ideas underlying the analysis encompassed the Keynesian liquidity preference model, the cash conversion cycle framework, the transaction cost notion, and the stakeholder perspective. The research population included all private healthcare organizations in Isiolo County. A descriptive research design was utilized, incorporating feedback from 39 participants: 13 managers, 13 inventory supervisors, and 13 finance experts from six private healthcare organizations in the area. A thoroughly designed questionnaire was employed to collect primary data on each focal region. A preliminary investigation was undertaken to verify the precision and reliability of the data collection apparatus. The tool's dependability was evaluated using the Cronbach alpha coefficient, with a threshold benchmark of 0.7. The data analysis incorporated both descriptive statistics, such as Ms and SDs, and inferential methods, including correlation and regression analysis, to ascertain inter-variable correlations. A significance level of 0.05 (P-value) was utilized in the interpretation of data. Additionally, measures like model fitness (R²), ANOVA results, and regression outputs were evaluated. Qualitative insights were systematically grouped thematically, while quantitative facts were conveyed through frequencies and percentages. The investigation's findings indicated that the majority of respondents were female, and most participants were aged between 31 and 40 years. The data indicates that undergraduates constituted the predominant group of respondents with the highest educational attainment. The analysis determined that WCM strategies, encompassing inventory control, cash management, and the management of payables and receivables, substantially influence financial performance. The accounts payable data provide statistically significant correlation coefficients, thereby justifying the rejection of all null hypotheses. The study indicated that the finance director in these hospitals should consistently convey payment terms to clients promptly to ensure adherence to those requirements. The report suggests that credit officers at these hospitals periodically assess the aging of accounts receivable to ensure ongoing follow-up on outstanding payments.