- The Complete Research Material is averagely 86 pages long and it is in Ms Word Format, it has 1-5 Chapters.
- Major Attributes are Abstract, All Chapters, Figures, Appendix, References.
- Study Level: BTech, BSc, BEng, BA, HND, ND or NCE.
- Full Access Fee: ₦4,000
Get the complete project »

CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Over the years, poor management of working capital has been one of the major reasons for business insolvency, bankruptcy and the ultimate failure. Working capital refers to the funds needed to pay for the daily operations of the business, which are the short-term drivers of an organisation (Harris, 2005). Gross working capital consists of cash, inventory, account receivables and account payables. Atrill (2006) defines net working capital as a net of the short-term assets and liabilities that continuously flow into and out of the business that are important for daily operations. Mukhopadhyay (2004) terms working capital as the life giving force of any business venture and states that for continued business operations then the current assets (bank, cash, marketable securities, payment of advance taxes, debtors and inventories) and current liabilities (short-term loans, creditors and advances) should be well managed. Performance revolves around an organization’s output in respect to its objectives and is expressed in terms of profitability and expected behavioral output. Financial performance is regarded the only worthy measure of organizational performance due to its value to the shareholders, management and the market (Fwaya, 2006). This is because it indicates an organization’s success and sustainability through its ability to operate above its costs.
1
Maintaining the working capital at an optimum is the main concern of working capital managers as a firm loses money in the form of interest on the blocked funds in case of holding excess working capital when there are inadequate opportunities. During periods of economic turbulence, the firms with reliable and efficient working capital management practices are able to survive (Reason, 2008). During periods of economic boom also, efficient management of working capital is important as it involves the management of both current assets and current liabilities (Emery, Finnerty & Stowe, 2004). According to Darun (2011), working capital management is not only important in cases of financial distress but can be managed in the most efficient way to increase a firm’s profitability and a competitive edge over the others.
The processes of managing working capital involve significant decisions on various aspects- investment of available cash, managing accounts receivable, maintaining an absolute level of inventories and the management of accounts payables (Darun, 2011). Gitman (2009) notes the main goal of working capital management as striving to reach and maintain an optimized balance between the various components of working capital, as the success of a business, according to Filbeck and Krueger (2005), depends heavily on the ability of financial executives to manage receivables, payables and inventory in the most efficient way.
A number of studies on working capital have been carried out around the world but mostly in the developed western countries, with very little on firms in the developing countries (Quayyum, 2012). These include firms operating in
2
African countries, which face unique challenges in their operations given the high political instability, insufficient financing and little or slow technological advancement among others (World Economic Forum, 2011). Numerous theories have also been developed on working capital management including the Baumol cash management model (1952), Miller- Orr cash management model (1966) and the inventory management model. However, practitioners find these financial decision making techniques difficult to put into actual application due to their unrealistic assumptions including the ignorance of uncertainty in business operations and their complexity in explaining to decision makers (Trahan & Gitman, 1995).
Studies on working capital management on Kenyan firms especially in the service sector and in particular, the tourism industry that is core to the Kenyan economy, are not explicit. It is therefore, important to study the working capital management in the tourism industry in these developing economies given their uncertain business environment.
1.1.1 The Tourism Industry
According to The World Tourism Organization (2013) tourism is one of the important sectors in the world economy and governments should support it in order to stimulate their economies. Woods, Perry and Steagall (1991) content that tourism is an export industry that offers domestic experiences and services to foreign visitors in a destination country in exchange for foreign currency and comprises of all the sub sectors that provide goods and services to enable business, leisure and pleasure activities in an environment away from home.
3
In Kenya, tourism is an important sector providing employment, contributing to the GDP and stabilising the country’s balance of payments. It accounts for 12 % of the total wage employment, contributes to 13.7 % of the GDP and ranks third in contributing foreign exchange after tea and horticulture (Government of Kenya, 2013). As cited by the Government of Kenya (2013), tourism in 2011 contributed 10 % of the GDP (Kenya‘s Tourism Strategic Plan 2000-2012); 5.7 % in direct contribution and 13.7% in total contribution (World Travel and Tourism Council, 2011).
The Kenyan coastal region is the main tourist destination in Kenya. The hospitality industry in this region relies heavily on tourism and especially foreign arrivals for their existence and performance (Government of Kenya, 2013). As cited by Kingi et al., (2013), the Kenyan coastal region has the highest number of hotel bed nights by international tourists at 71 % in 2002, 56
% in 2004 and 63 % in 2006. Nairobi region had 19 % in 2002, 28 % in 2004 and 16 % in 2008 while other regions of the country have much lower percentages (Government of Kenya, Statistical Abstract, 2008).
1.2 Statement of the Problem
The tourism industry operates on seasons (peak, shoulder and low) and is very sensitive to the environment especially on security concerns (Kuto & Groves, 2004). In Kenya, the tourism industry operates in a highly uncertain environment due to the increased political instability and terrorism incidences that have led to negative international press and travel advisories resulting in dwindling demands (Okumu, 2007). The tourism industry is highly capital
4
intensive hence, the low demand has led to most tourist hotels cutting down on their services and eventually closing down due to the inability to manage their working capital optimally.
Much of the previous studies on working capital management has concentrated on the manufacturing industries in the trade sector (Filbeck, Krueger & Preece, 2007; García-Teruel & Martínez-Solano, 2007; Lazaridis & Tryfonidis, 2006; Azam & Haider, 2011; Quayyum, 2012). To date, little focus has been given to the management of working capital in the service sector and in particular, the tourism industry. Consequently, working capital management advice to the service sector has been monotonous in its prescription of trade sector solutions. To further compound the issue, many of these studies assume that trade sector praxis can be applied to the service sector though contemporary academic opinion suggests that this assumption is fundamentally flawed as it is now widely accepted that the service sector is subject to different operational dynamics to the trade sector (Kato, 2010).
Even with such uncertainty, the tourism industry players continue employing the same working capital management practices used in the other more certain and stable industries. This has led to overtrading and the subsequent poor performance of the tourist subsectors. To maintain a competitive edge or even sustain operations in such an uncertain economic environment, the working capital should be managed in the most prudent manner. This study therefore, sought to gain an empirical insight into the various working capital management practices used in the tourism industry, with special reference to
5
tourist hotels in Mombasa County with the aim of determining best practices in uncertain business environments.
1.3 Objectives of the Study
1.3.1 General Objective
The overall objective of the study was to determine the effects of working capital management practices on the financial performance of tourist hotels in Mombasa County.
You either get what you want or your money back. T&C Apply

You can find more project topics easily, just search
-
SIMILAR BUSINESS ADMINISTRATION FINAL YEAR PROJECT RESEARCH TOPICS
-
1. THE ROLE OF ENTREPRENEURIAL COMPETENCIES ON THE SUCCESS OF SME IN NIGERIA
» CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY Small and Medium Enterprises (SMEs) are the backbone of the contemporary economic development due...Continue Reading »Item Type & Format: Project Material - Ms Word | 52 pages |
Instant Download | Chapter 1-5 | BUSINESS ADMINISTRATION DEPARTMENT
-
2. THE ROLE OF EDUCATION TRUST FUND (TETFUND) ON THE DEVELOPMENT OF EDUCATIONAL INFRASTRUCTURE IN KOGI STATE: (A CASE STUDY OF KOGI STATE POLYTECHNIC, L...
» CHAPTER ONE INTRODUCTION 1.1 Background to the Study The tertiary education trust fund supports a variety of programs and activities design to advance...Continue Reading »Item Type & Format: Project Material - Ms Word | 52 pages |
Instant Download | Chapter 1-5 | BUSINESS ADMINISTRATION DEPARTMENT
-
3. THE ROLE OF COMMUNICATION IN ENHANCING PRODUCTIVITY IN HAMDALA HOTEL LTD KADUNA
» CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY As business is becoming more and more complex, organizations are tending to group together and to...Continue Reading »Item Type & Format: Project Material - Ms Word | 75 pages |
Instant Download | Chapter 1-5 | BUSINESS ADMINISTRATION DEPARTMENT
-
4. THE IMPACT OF DIVIDEND POLICY AND EARNINGS ON STOCK PRICES OF NIGERIA BANKS
» ABSTRACTThis study examined the impact of dividend yield on stock prices of Nigerian banks; theimpact of earnings yield on stock prices of Nigeria ban...Continue Reading »Item Type & Format: Project Material - Ms Word | 50 pages |
Instant Download | Chapter 1-5 | BUSINESS ADMINISTRATION DEPARTMENT
-
5. CORPORATE PERFORMANCE AND TOTAL QUALITY MANAGEMENT (A STUDY OF MILLENNIUM INDUSTRY LTD AWKA)
» ABSTRACT Total quality management, which is the practice of striving fore customer satisfaction by ensuring quality from all departments in an organiz...Continue Reading »Item Type & Format: Project Material - Ms Word | 93 pages |
Instant Download | Chapter 1-5 | BUSINESS ADMINISTRATION DEPARTMENT
-
6. EFFECT OF COMPUTERIZED ACCOUNTING SYSTEMS ON RISK BASED INTERNAL AUDITING IN HOMA BAY COUNTY GOVERNMENT, KENYA
» ABSTRACT For several centuries, internal auditing has been believed to be helping firms in protecting financial resources and assess recognized intern...Continue Reading »Item Type & Format: Project Material - Ms Word | 52 pages |
Instant Download | Chapter 1-5 | BUSINESS ADMINISTRATION DEPARTMENT
-
7. THE IMPACT OF LEADERSHIP STYLE ON WORKER’S PERFORMANCE: A CASE STUDY OF GUARANTEE TRUST BANK PLC,
» CHAPTER ONE 1.1 BACKGROUND TO THE STUDY There is hardly any conversation today in Nigeria that doesn’t begin with the word “leadership&rdq...Continue Reading »Item Type & Format: Project Material - Ms Word | 101 pages |
Instant Download | Chapter 1-5 | BUSINESS ADMINISTRATION DEPARTMENT
-
8. THE RELEVANCE OF MARKING IN BANKING INDUSTRY IN NIGERIA (A CASE STUDY OF UNION BANK PLC, IDAH BRANCH KOGI STATE)
» .CHAPTER ONE: INTRODUCTION 1.1 BACKGROUND OF THE STUDY A bank is a financial institution set up purposely for safe keeping of money, valuable goods an...Continue Reading »Item Type & Format: Project Material - Ms Word | 52 pages |
Instant Download | Chapter 1-5 | BUSINESS ADMINISTRATION DEPARTMENT
-
9. THE IMPACT OF FINANCIAL ACCOUNTING ON CORPORATE PERFORMANCE OF BUSINESS ORGANIZATIONS IN NIGERIA
» CHAPTER ONE INTRODUCTION 1.1 BACKGROUND TO THE STUDY The impact of financial reporting on the corporate performance of a business organization is beco...Continue Reading »Item Type & Format: Project Material - Ms Word | 50 pages |
Instant Download | Chapter 1-5 | BUSINESS ADMINISTRATION DEPARTMENT
-
10. THE IMPACT OF KADUNA INTERNATIONAL TRADE FAIR ON THE DEVELOPMENT OF THE NIGERIAN ECONOMY
» CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY In any economy, the impact of trade fair can not be over emphasized as it play a vital role in th...Continue Reading »Item Type & Format: Project Material - Ms Word | 67 pages |
Instant Download | Chapter 1-5 | BUSINESS ADMINISTRATION DEPARTMENT