Assessment of working capital in the telecommunications industry: A case study of Liquid Telecom Uganda Limited

Abstract

This study is to examine working capital management issues in the telecommunications industry of Uganda, using Liquid Telecom as a case study. This is because Liquid telecom perpetually faces working capital management challenges due to its growth prospects, constantly changing technology which must be updated and the need to manage the threat of cut-throat competition. Hence the research objectives were to examine the nature of working capital management in Liquid Telecom Uganda Limited, to examine the challenges of working capital management in Liquid Telecom Uganda Limited and to find out the strategies for managing the challenges of working capital management in Liquid Telecom Uganda Limited. The study adopted a cross sectional survey design cross sectional study design, which was descriptive in nature. A sample of 52 company staff was selected using simple random sampling technique. Both qualitative and quantitative data was used. It was found that there is indeed poor working capital management at Liquid Telecom Limited. Working capital management is a big challenge for Liquid Telecom as it presents several questions regarding weighing between costs and benefits, and whereby it is not easy to determine an optimum position on working capital to be held by the company, yet it has ambitious growth prospects. Liquid Telecom Limited has a conservative approach or strategy for handling the challenges of working capital management and this is why its problems of continued poor liquidity persist due to the cautious, if not disinterested, approach by the managers in handling the problem. It was recommended that the firm needs a separate policy on all the components of working capital like cash policies, inventory policies, credit policies, payable policies etc. In order to improve on working capital management, management of the company should conduct regular refresher training for all staff in the finance and management positions. The company can consider hiring an expert consultant, and they should consider the aid of technology in managing this challenge by investing in advances working capital management software.