Effect of Cashflow Management Practices on Financial Performance of Hotels in Nyeri County Kenya

Abstract

This research was aimed at examining the effects of working capital management practices on the financial performance. The study sought to establish, the influence of cash management practices on financial performance of the Hotels in Nyeri County Kenya. The study was anchored liquidity theory, The study embraced descriptive research design. All hotels in Nyeri county Kenya formed the target population of the study. A purposive sample of two respondents in the management level in each hotel was used. One general manager and one financial manager from each hotel selected. The researcher collected primary data in independent variable with the use of semi structured questionnaire..Cronbach alpha coefficient of 0.7 was used to ascertain test of the reliability of the data collection instrument. Inferential statistics was also carried out to establish the nature of the relationship that exists between variable and performance. Data was interpreted with the help of 0.05 significance P-values. Model fitness R2, ANOVA statistics and regression coefficient were generated. Prior to running a regression model, multicollinearity test and normality test were conducted. Data that was analyzed was obtained from 65 respondents out of the targeted 72 achieving 90.3% response rate. The results indicated that cash flow management practices had positive and statistically significant effect on financial performance of the Hotels at the 0.05 level of significance The study recommends that Hotels should come up with cash management policy with a view to enhance maintain optimal level and to control cash with a view to ensure that there is smooth running of the day-to-day operations. In addition. Future research could focus on the challenges Hotel industry face when they focus on working capital management practices.