Does Firm Size Moderate the Relationship Between Working Capital Level and Firm Profitability?

  • Lubega D. Ssendagire Department of Accounting and Finance, Kyambogo University, Kampala, Uganda
Keywords: Profitability, firm size and working capital level

Abstract

This study is aimed at investigating whether firm size moderates the relationship between working capital level and profitability of manufacturing firms in Uganda. The study was based on theResource – Based Theory and it is to do with resources invested in the firm and much emphasis is put on the short-term assets. The study used secondary data and applied simple and stratified sampling techniques. The unbalanced pooled panel data analysis of cross sectional and time series was employed. A record survey sheet was used to collect data and there after diagnostic tests was carried out for normality and data was fairly normally distributed and also showed a linear relationship which is a condition for parametric data. A total population of 169 manufacturing firms was considered and a sample of 116 was taken into consideration giving a response rate of 27% as only 31 firms were able to avail information. Results showed R2 = .155, F (3, 85) = 5.185, P< .05. The interaction termwas not significant thus (β = .001, P > .05). Findings revealed that the moderating influence of firm size on the association between working capital level and firm profitability was not statistically significant and consequently the null hypothesis was not rejected. It can be concluded that size does not moderate the relationship between working capital level and firm profitability.

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Published
2020-03-19
How to Cite
Ssendagire, L. (2020, March 19). Does Firm Size Moderate the Relationship Between Working Capital Level and Firm Profitability?. African Journal of Education,Science and Technology, 5(4), Pp 64-71. Retrieved from http://ajest.info/index.php/ajest/article/view/417
Section
Articles