The Effect of Working Capital Management on Financial Performance of Manufacturing Companies in Rwanda: A Case of Horizon Sopyrwa, 2021-2023

Iraguha Berthile & Kato Mahazi Kasozi
University of Kigali
ORCID: https://orcid.org/0009-0009-4254-1212
Email: bellyra2015@yahoo.fr

Abstract: This research investigated the effect of working capital management on the financial performance of manufacturing companies in Rwanda, with a specific focus on Horizon Sopyrwa 2021-2023. The findings showed that inventory control management had a major impact on financial performance. Inventory control management had a statistically substantial effect on financial results, according to the regression analysis, with a standardized coefficient (β) of 0.38 (p = 0.002) for ROA, 0.44 (p = 0.001) for ROE, and 0.26 (p = 0.031) for liquidity ratios. The analysis indicated that accounts receivable management had a significant positive impact on financial performance. Regression results supported these findings, with a standardized coefficient (β) of 0.28 (p = 0.008) for ROA, 0.33 (p = 0.004) for ROE, and 0.32 (p = 0.005) for liquidity ratios. The results further showed that accounts payable management positively influenced financial performance. The results of regression analysis demonstrated that accounts payable management had a significant impact on financial performance, with standardized coefficients (β) for liquidity ratios of 0.34 (p = 0.002), ROE of 0.28 (p = 0.006), and ROA of 0.25 (p = 0.020). The study came to the conclusion that improving the financial performance of Rwandan manufacturing enterprises requires effective working capital management techniques. The research paper suggests that Horizon Sopyrwa and similar companies use best practices in working capital management to boost revenue, liquidity, and overall financial health.