Working capital management and profitability in an era of pandemic: Evidence from micro, small and medium enterprises

Abstract

The study examined the nexus between working capital management and profitability in an eraof pandemic among Micro, Small and Medium Enterprises (MSMEs). The study adopted a survey research design while Primary data was obtained from listed members of the Kwara State Chamber of Commerce, Industry, Mines and Agriculture (KWACCIMA) within Ilorin metropolis
of Kwara State. Convenience sampling technique was used in the administration of structured questionnaires to 81 MSMEs owners who were considered in the sample size to obtain the data analyzed. Pearson Product Moment Correlation (PPMC) was used to analyze the data obtained. The findings of the study revealed that majority of the MSMEs in Ilorin metropolis had sufficient awareness of working capital management while a negative relationship was also found between working capital management practices and profitability with r(79)=0.462=-0.025 with working capital management explaining 21% of the variation in profitability. The study concluded that there is high knowledge of the concept of working capital management among MSME business owners in Ilorin metropolis and an inverse relationship exist between working capital management and their profitability. The study recommended that more awareness of working capital management components such as Debt Management (DM) and Cash Conversion Cycle (CCC) still needs to be sought to improve their profitability especially to curtail financial disruptions during the era of pandemic.