Cash Management and Financial Sustainability of Non-Financial Firms Listed in Stock Exchanges in East Africa
DOI:
https://doi.org/10.51699/cajitmf.v7i1.1157Keywords:
Cash Management, Working Capital Management, Cash Conversion Cycle, Financial Sustainability, Listed non-financial firmsAbstract
The study sought to assess the effect of cash management on financial sustainability of non-financial firms listed in East Africa’s stocks markets. The study was anchored on trade-off theory of liquidity and the Baumol model of cash management. The study was guided by exploratory correlational research design. The target population was all 47 listed non-financial firms in East Africa’s stocks markets (Uganda, Kenya, Rwanda and Tanzania). The study collected secondary data obtained from the audited financial returns of the individual listed firms for a period of ten years from 2014 to 2023. Panel data collection sheet was used to collect the secondary data. The collected data was analysed using Stata software via descriptive statistics (mean, standard deviation, percentages) and inferential statistics (ANOVA, Regression coefficients, R-square). The analysed data was presented using tables and figures. The findings revealed that cash management had a significant effect on financial sustainability of the listed firms. The study found wide disparities in cash management among listed non-financial firms in East Africa, with cash conversion periods ranging from negative to over 700 days. Trend analysis revealed periods of inefficiency but recent improvements, while financial sustainability remained volatile. Regression results showed cash management significantly explained 41.2% of financial sustainability variation. The study concludes that efficient cash management is critical for sustaining firms’ operations. It recommends strengthening receivables collection, optimizing inventory turnover, and leveraging supplier credit prudently to enhance liquidity and long-term financial sustainability.
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