WORKING CAPITAL MANAGEMENT AND FINANCIAL PERFORMANCE OF MEDICAL INSURANCE COMPANIES IN KENYA
WORKING CAPITAL MANAGEMENT AND FINANCIAL PERFORMANCE OF MEDICAL INSURANCE COMPANIES IN KENYA
Jawahir Buthul Shurie - Masters Student, Management University of Africa, Kenya
John Cheluget - Lecturer, Management University of Africa, Kenya
ABSTRACT
The current study sought to investigate the influence of the components of working capital on the financial performance of medical insurance companies in Kenya. Specifically, it set out to establish the influence of inventory management and receivable management on the financial performance of medical insurance companies in Kenya. The study was guided by agency theory, stakeholders, and transaction cost theory. The study's Population target included 69 licensed medical insurance firms in Kenya. Sampling for the study was done through the Yamane formula to achieve 41 medical insurance companies. Data for the study was collected through secondary data collection schedules by perusing the published financial statements, and magazines, and seeking financial records from the financial managers in the medical insurance firms. Data collected was analyzed through both descriptive and inferential analysis. The inferential analysis involved the use of Analysis of Variance, regression coefficients or beta values, and t-statistics at a significance level of 0.05. The results of the study were tabulated and interpreted narratively. Inventory and financial performance revealed (β=0.173, t=1.101 &p-value=0.279), while Receivable management and financial performance revealed (β=0.335, t=2.323 &p-value=0.027). The study found that inventory management positively but insignificantly influenced the financial performance of medical insurance companies in Kenya. The study also recommended that the medical insurance companies need to enhance better practices on receivable management by asking their clients to pay for policies in good time to enhance better financial performance. The study also recommended that medical insurance companies adopt good practices on inventory management including having optimal quantities of inventories at all times by adopting practices such as economic order quantities.
