Abstract
This study sought to determine the effect of working capital management on financial performance of telecommunications companies in Kenya by taking a case of Safaricom Company Limited. Multiple linear regression was used to evaluate the effect of operating working capital turnover, cash conversion cycle and current ratio on return on assets. It controlled for the effect of size. Statistical significance was tested using t-test and F-test at 5% level of significance. The study found out that working capital turnover had a positive effect on return on assets. The correlation analysis indicated that the effect was significant. It was found out that cash conversion cycle had a positive effect on return on assets. However the correlation analysis indicated that the effect was not significant. Also the study found that current ratio had a negative effect on return on assets. The effect was however not significant. The size of the firm was found to have a negative effect on return on assets. The result of t-test indicated that the effect was not significant at 5% level of significance. The study concluded that working capital turnover had a positive but insignificant effect on financial performance of Safaricom Limited. It also concluded that cash conversion cycle had an effect on financial performance of Safaricom ly but the effect was not significant. Further, current ratio was concluded to have a negative effect on financial performance of Safaricom. However the effect was not significant. Finally the study concluded that size had a negative but insignificant effect on financial performance of Safaricom Limited. The study recommended that Safaricom should adopt measures to increase operating working capital turnover. This would result in improvement in financial performance of the company. Also the company should adopt measures to lengthen the cash conversion as this would result in improvement in financial performance.