Abstract:
Working capital is a measurement used to define the differential between current assets and
current liabilities, in other words, assets that are expected to turn into cash in the near future
versus liabilities that require prompt cash payment. Management of short-term
assets and liabilities play a major role in generating profit in business sector. In light of that, the textile
sector from all over the world is also emphasizing on to maintain optimal working capital to
generate more profit. Researchers and practitioners around the world have done lot of work
on how to maintain working capital in optimal level. Similarly, in Kenya, textile sector has
focused to ensure efficient working capital management. But inadequate research work has
been done on working capital management in textile companies of Bangladesh. On this
background, the objective of this study is to examine the impact of different components of
working capital management practices on profitability of the Kenya textile companies. The
lindings of the study showed that, there is statistically significant relationship between
working capital management practices and profitability of Kenyan textile companies. More
specifically, this study shows that Current ratio and Current liabilities to total asset has most
significant impact on profitability of textile companies in Kenya.
