CASH MANAGEMENT AND FINANCIAL PERFORMANCE OF PUBLIC UNIVERSITIES IN KENYA

Abstract

The financial performance of Kenyan universities has been declining to recent time where most of the universities reported deficits in their income statement, following the dwindling revenues universities are in a deep financial crisis that can possibly lead some of them to a halt. Auditor General declared 11 universities insolvent in a report to Parliament for financial year (2017/2018). Proper cash management is essential for any organizational survival. This is because an institutions’ inability to identify relevant cash management practices can be its source of inability to perform. The general objective of this study was to determine the Effect of cash management on financial performance of public universities in Kenya, which was guided by the following independent variables; effect of cash ratio management on financial performance of public universities in Kenya, effect of operational cash flow management on financial performance of public universities in Kenya, effect of cash budget management on financial performance of public universities in Kenya and the effect of student enrollment on the relationship between Cash  management on financial performance of universities in Kenya . The study was anchored on operating cycle theory, liquidity theory and Baumol’s Cash Management Model. The scope of the study was based on public universities in Kenya for period between years 2016 to 2019. Existing literature was reviewed in details in chapter two of the study. Quantitative research design was used in this study. The study population was 31 accredited public universities in Kenya. Secondary data was collected from the auditor general’s office. The study found that cash management affects financial performance of public universities in Kenya. The study revealed that student enrolment moderates the relationship between cash management and financial performance of public universities in Kenya. The study concluded that cash management plays a significant role in financial performance of public universities in Kenya.  The study therefore recommended that all public universities embrace prudent cash management in order to have sound financial performance.