Working Capital Management and SME Performance in Selected SMES in Ibadan, Oyo State

Abstract

This research investigated the influence of working capital management on SME performance in 
Ibadan, Oyo State, with a specific focus on working capital efficiency, cash, and accounts receivable 
management. The study is guided by resource-based and operating cycle theories. The population 
includes all 1108 staff members of SMEs in the selected three senatorial districts in Ibadan, and a sample 
size of 287 was determined using the Taro Yamane Formula. Results are presented through tables 
featuring percentages, frequency count, mean, and standard deviation. Hypotheses are tested via linear 
regressions at a 0.05 significance level. The analysis indicates a notable link between working capital 
management efficiency and SME profitability (F = 61.758, p < 0.001). Additionally, cash management 
significantly affects profitability (F = 136.182, p < 0.001), while accounts receivable's impact on return 
on investment is also significant (F = 4.361, p < 0.003). Moreover, inventory management significantly 
influences customer satisfaction (F = 56.988, p < 0.001). The study affirmed that proficient management 
of working capital significantly influences SME financial performance. Strong evidence links working 
capital efficiency, cash, accounts receivable, and inventory management to profitability and customer 
satisfaction. Significant p-values underscore the importance of these factors. It was recommended that 
SMEs improve working capital management through robust account management and inventory 
control.