CHAPTER ONE

INTRODUCTION
Background of the study
Cash is the life blood of every business and good cash management is essential to a business
success. No business can succeed in the long run without knowing exactly spending each
month. It need account, but same small business is too small to need it, therefore decision and
daily activities are based on guesses and not facts.

Cash management is the process of collecting and managing cash flows. Cash management can
be important for both individuals and companies. In business, it is a key component of
a company's financial stability. (Will kenton 2021). This will safeguard the obligation of firm
and hence making it able to achieve its need. However Organisation may fail to meet its
obligation due top misappropriation of cash, limited cash resources, poor safety of cash, and
poor allocation of cash. it is upon this the Organisation may fail to successes .chamberlain
(2020), says that if one considers that cash management is such a fundamental principle of
sustainability , small scale retail shops need to be totally committed to doing right activities for
their sustainability .
There is no single universally accepted definition of SMEs but many vary according regional
differences .Murdoch (2007) states that “ like proverbial elephant the small firm is one of those
things that is recognized when seen but difficulty to define.”
in Uganda small scale is an enterprise or firm employing 1 less than 5 but with maximum of 50
employees with the value of asset , excluding land , building and work and working capital of
less than ug.50 mill(US$ 30000). And the annual income turnover of between ugshs. 10-50
million (US$ 6, OOO- 30,000). A medium sized enterprise is considered a firm, which employs
between 50-100 workers (kazooba, 2006)
Small scale retail business is one of the fastest growing sectors in Uganda but their challenge is
high rate of failure since over 10,000 people who start a business every year 40% fail within
year and 80% with 5 years. Small scale business in Uganda are failing due to; failure to
adequately anticipate cash flows, and due to inadequate cash reserves (kazooba, 2006)
Although cash management methods have applied in many small scale retail shops in kikoni
trading area, many shops are suspected to have failed or sustainable for a short period of
time. This has prompted the researchers to investigate the root cause of failure of the small and
medium sized enterprises even when they apply cash management practices.
Statement of the problem

A cash management is not matter of choice, it is something that must be

Under taken in any business to stay in operation (laud 2018) there is no practice way of determining the
exactly amount of cash that enable small-scale retail shops to succeed.

The role of SMEs in the world have been highly emphasized as the means through which rapid
industrialization and other development goals of a nation can be realized.

In Uganda SMEs are viewed as seedbeds for growth of new firms and vehicles for poverty reduction.
Deterioration in growth and failures in SMEs has been linked to poor cash flow management.

The study of the relationships between cash flow and sustainability is thus necessary as means to
understand and improve upon the success of such SMEs .

Such as the study on a group of SMEs in KIKONI trading area in Kampala, Uganda will give an easy entry
to understand such a relationship.

Therefore , we wanted to find out how financial revenue collection was influencing service delivery in
kikoni and find out possible improvements to the problems if any.

Research questions

✔ What is the level of cash management among small scale retail shop in konini trading area?
✔ What is the level of sustainability among small scale retail shops in konini trading area?
✔ What is the relation between cash management and sustainability of small scale retail shops in
Kikoni trading area?

General objective of the study

✔ To examine how cash flow influences sustainability of small business and medium enterprise in
Kikoni trading Centre

Specific objectives of the study

✔ To find out the level of cash management in small-scale retail shops in Kikoni trading center
✔ To establish the level of sustainability of small scale retail shop in Kikoni trading center-re
✔ To examine the relation between cash management and sustainability of small scale retail shops
in Kikoni trading area.
Hypothesis

There is no significant relationship between cash management and sustainability of small scale retail
shops in Kikoni trading center.

Significance of the study

✔ To the SMEs owners, the research finding is likely to be used by small scale retail shop in Kikoni
trading center to improve cash management and ensure their success
✔ To the community, the research finding area likely to be used by other small scale retail shops
other than in Kikoni area to enhance their sustainability
✔ To the researchers, the study will to ado the existing literature about small scale retail shops
cash management and sustainability in Kikoni area and will be used as reference by future
researchers

Scope of the study

The study on cash management and sustainability of small scale retail shops is carried out in Kikoni
trading area ,which is 3.4km in Kampala , Kikoni is located in Kawempe division it is boarded by bwise to
the north ,Makerere to the east, nakulabye to the south west in Kampala district .

Geographical of the study

The study covered the relationship between cash management and the sustainability of small and
medium sized enterprises both in the sort and long run. The variables of cash management were.
Accounting, financial budgeting, and management of returns on capital employed/profits while the
variables of sustainability area; expansion and continuity of the business

Content of the study

The study will cover literature from 2015 to 2021 and it will follow the following objectives :

✔ To find out the level of cash management in small-scale retail shops in Kikoni trading center
✔ To establish the level of sustainability of small scale retail shop in Kikoni trading center-re
✔ To examine the relation between cash management and sustainability of small scale retail shops
in Kikoni trading area.

Time scope
The research cover period of three years ranging from 2015 to 2021 and was conducted from February –
may 2022.

Limitation of the study

Unwillingness of some respondent to reveal their financial information. For example about cash
management. This will solve by informing the respondents that all the data collected will treat us
confidential information

The variable cash management are; financial budgeting, accountability and management of return on
employee/profit and dependent variable sustainability, expansion, continue of the business

Slow repose and non-response from some of the respondent; some respondents had claimed that they
will be also busy and others will mean. This will reduce by keeping in touch with them, and uses of
convincing communication which attracted to answer the questionnaires and also created relationship
with them

Theoretical frame work

Miller Orr (1966) states that a business should place an upper and lower limited cash balances. When
the upper limited is reached, transfer of cash to other investment is made and when the lower limit is
reached, a transfer from investment to cash occur. A transaction will not occur as long as the balance
falls within the limit. When the lower limit is reached the business can sell its investments to raise cash.
The business can invest excess cash by buying se securities and lowering cash holding when the upper
limited is attained.

Stone’s theory (1993) agrees with miller Orr’s theory. It incorporates a look ahead forecast of cash flows
when an up/ lower limit is hit to take into account the possibility that the surplus or deficit of cash may
naturally correct itself. if the upper limited is reached but is to be followed by cash outflow, days that
would bring the cash balance down to an acceptable lever, then nothing is done .instant the surplus
cash would substantially remain that way and cash is withdrawn to get the cash is withdrawn to get
the cash balance to a predetermined return point . The theoretical framework reveals that miller’s
theory underpins the study.

Conceptual framework

The conceptual frame work of the study comprised of independent variable cash management and
dependent variable as sustainability. The variables of cash management were: accountability; financial

Budgeting and management of return employee/ profit; variable sustainability were; expansion and
continue of the business
 Figure of conceptual framework
Independent variable dependent variable

Cash management
Sustainability
Financial budgeting
Expansion
Accountability
Continuity of the
Management of return on
business
employee/
Figure profit framework
1 : conceptual

Source :

Operation definition of terms

Cash management sustainability

referred to controlling cash inflows and cash outflows in small scale retail shops in kikoni trading area. It
included: accountability, financial budgeting, management of returns on capital employed/profits

Accountability

This was where the small scale retail shops in kikoni trading area showed how all money received as
spent at a given period of time for business transactions.

Financial budgeting

This was whereby the small scale retail shops in kikoni trading area showed a plan of how they were
going to spend the cash received and also controlled their expenditure through the plan.
Management of return on capital employed (ROCE)

It is controlling of the profit that small scale retail shops in kikoni trading area were achieving from the
capital employed.

Sustainability

Referred to a situation whereby the small scale retail shops in kikoni trading area were in operation
today and tomorrow that showed progress in their activities it included expansion and continuity of the
business.

Expansion

Means a business strategy in which growth was obtained by increasing the number of stores in which
customers could buy a company’s products and services

Continuity of the business

This is a term for a business that have the resources needed in order to continue to operate indefinetly.
In other words, the traders in kikoni area believed that their shops were not liquidate/closed down in
the near future
Chapter Two
Literature Review

This chapter presents a review on existing literature on cash management as an independent variable
and survival/success as a dependent variable as well as the relationship between the two variables.

Cash management

Cash management involves managing the monies of the firm in order to maximize cash availability. It
includes the policies and procedures adopted by the management of an entity to assist in achieving the
man agents objectives of ensuring orderly and efficient conduct of business including adherence to
management policies, laws and regulations safeguarding cash, the prevention and detection of fraud
and error, promoting orderly, efficient and effective operations, quality of product and services, timely
delivery and hence ensuring survival of the business

Cash management is concerned with managing cash inflows and cash outflows. Major sources of source
of cash include; cash from operating activities, sell of business assets among others. Cash needs to be
efficiently managed and allocated to meet routine business objectives (brinhk, 2020)

The goal of cash management is to manage the cash balance of an enterprise in such a way as to
maximize the availability of cash not invested in fixed assets or inventories and to do so in such a way as
to avoid the risk of insolvency (Kino, 2016).

The goal of cash management is to maximize the availability of cash while

still meeting obligations and avoiding the risk of insolvency. (Rose financial,
2020)
Accountability

Sound cash management depending on the accuracy and validity of the accounting system that is used
to control the collection, disbursement and investment of cash. All the cash balances should be properly
recorded and classified and any restrictions on the availability of funds should be properly disclosed.
Also cash deposits should be adequately collateralized and the entity should monitor collateral to
ensure adequacy.

Accounting also takes on the on the collection of debts from the business debtors and recording tem
timely and appropriately (DiNAPOLI, 2012)
Smith (2011) says that many times organizations charts and job descriptions push people into boxes.
They gives people idea that they are getting paid and using their skills to perform a defined function or
set of tasks. The task-oriented mindset leads people to believe that they perform their functions they
have done what they are supposed to do whether or not the result was achieved. Effectives leaders
operate on the premise that their people must focus on achieving the results, they lead people beyond
boundaries of their jobs and inspire them to relentlessly pursue results by creating an environment that
motivates them to ask ;what else can I do? Over and over, until the results are achieved rather than
treating the circles as mutually exclusive, they manage their people so that their job is to achieve the
result. This mind set becomes part of the culture only if people understand the results they are
supposed to achieve with the job they are to perform. Only when you assume full accountability for your
thoughts, feelings, actions and results can you direct your own destiny otherwise, someone or
something else will

This view of accounting can help revitalize the business character, strengthen the competitiveness of
companies, heighten innovation, improve quality of products and services provided, and increase the
responsiveness of organizations to the needs and want to of the customers and constituents

Accountability is an acceptance of responsibility for honest and ethical conduct towards

others. It implies a willingness to be transparent, allowing others to observe and evaluate
one's performance (WILL KENTON, 2021). If accountability is not working in your organization, then
every effort towards performance improvement will be inefficient and ineffective. The ability to execute
and deliver results is directly tied to the accountability attitudes, practices and systems t area in place in
an organization.

Financial budgeting

According to Dinapoli (2012) cash flow management is critical to any business and an integral part of the
process is the setting of realistic budgets based on the plans over a period of time. A budget plans
controls expenses and ensure that there is enough money available to finance current commitment and
future project. Financial budgeting can provide an indication of the potential problems and can serve as
a tool to help provide solutions to these problem. For example shops that engage in seasonal production
must invest large amounts of cash in inventory during the season then sell to recover the cash after the
season.

Financial budgeting provides information to help the organization plan the borrowing needed to finance
the inventory buildup. Financial budgeting is usually done on an annual basis as part of the business
planning process however there should be some degree of flexibility which allows for unplanned
expenditure to enable the business take advantage on new opportunities which may arise . This leads
us to the fact that budgets not only need to be created they also need to be monitored and managed.

Financial budgeting is a vital process for the management of all successful business. Careful tracking of
cash flow is important to highlight any variations against the original plan. Once problems are identified
actions can be taken to resolve them. In addition, a business knows exactly where its cash flow stands
then it knows how much money it has available at any given time and confidently refine its business plan
to invest in new activities if the opportunity arises (Marshall, 2012).

Managemment of return on capital Employed (ROCE)

Return on capital employed (ROCE) is a financial ratio that can be used to assess a
company's profitability and capital efficiency. In other words, this ratio can help to understand
how well a company is generating profits from its capital as it is put to use.( Adam Hayes,2021)
According to PietersZ (2015), return on capital employed should always be higher than the rate at
which the business borrow; otherwise any increase in borrowing will reduce shareholder’s earnings.
Return on capital employed takes the financial assets employed in the business including borrowings
and shareholders” funds and measure the return the business makes on them on them. If a business has
allow ROCE, it using its resources (cash) inefficiently.

Sustainability

Expansion

Continuity of the business

Summary of literature review and identified Gap

Cash management is typically of all firms in this competitive environment whether product or service
oriented. It should be noted from the above discussion that there is a strong relationship between cash
management and survival of SMEs. Masonson (2013) noted that cash is the life blood of the business;
therefore should be managed properly to prevent the business from running into bankruptcy.

According to Connors (2011) he suggested that if accountability is not working in your organization then
ever effort towards performance improvement and sustainability of the business will be ineffective and
inefficient. With the view of the above writer, the researchers’ aim was to resolve whether the idea was
applicable to kikoni trading area
CHAPTER THREE
METHODOLOGY

This chapter deals with the methodology for the study. It outlines the study research design, sampling
procedure, study of population, sample size, data collection , validity of the study, reliability of the study
and data analysis, and analysis of data.

Research design

The study will be descriptive, cross section and correlation research design

The description research design where will be used to determine the level cash flow management and
sustainability of small and medium enterprises in kikoni trading center.

Cross section design will be used in the study since the data will collect in particular time

Correlation research design will be used in the study to establish the relationship between cash flow
management and sustainability of small and medium enterprise

Location of the study

The study on cash management and sustainability of small scale retail shops is carried out in Kikoni
trading area ,which is 3.4km in Kampala , Kikoni is located in Kawempe division it is boarded by bwise to
the north ,Makerere to the east, nakulabye to the south west in Kampala district

Study population

The target study population will be composed of 100 SMEs in Kikoni trading center and they will be
grouped into four groups that is : catering & hotel services, Motor garages, saloon and hair dressing and
retail shops.

Sample size

The sample size will be determined using kreijce and Morgan’s table using a target population of 100
SMEs.

Table showing the sample size determination.

Service Sector of SMEs Total Population Selected Sample

Motor garages 15 (15 ÷ 100) ×80=12

Salon shops 30 (30 ÷ 100)×80=24
Catering &Hotels services 15 (15 ÷ 100) ×80=12
Retail shops 40 (40÷ 100)× 80=32
Total 100 80
Sampling procedure

Random sampling : the researcher carried out random sample survey among the community
members and this helps how to come up with the right sample,

Sources

Data collection instruction

The research obtained primary data directly from active SMEs and the tools for data collection will

Structured questionnaires in which formal lists of questions were administered to all respondents in the
same

Way.

Data Processing and Analysis

After data collection, sorting, and arranging, the summary of responses the information was first
entered in

To summary sheets. The analysis employed the use of frequency and custom tables. Correlation analysis
is used to establish the relationship between cash flow management and sustainability of SMEs in kikoni
trading area

. Multiple Logistic Regression was used to determine the major factors affecting sustainability.

Questionnaires

The questionnaire will construct basing on closed ended question .it had 2 sections; section A;
information on respondents bio-data. Section B; questions on cash management and
sustainability .questionnaires will administer face to face in order to get the respondents and some
qu4estion interpretation where possible. The summary of the Likert scale includes: 1-4 where; 1.00-
1.74=never interpreted as very low, 1.57-2.45=rarely interpreted as low, 2.50-3.24= often interpreted as
high, and 3.25-4.00= very often interpreted as very as very high

Scale Score Mean average Interpretation

Strongly agree, Very often 4 3.25-4.00 Very high

Agree, Often 3 2.50-3.24 High

 Disagree, Rarely 2 1.75-2.49 Low

Strongly disagree, Never 1 1.00-1.74 Very low

Validity and reliability

Before data collection, the validity and reliability is ascertained.

Validity if the study

In testing the validity of the research instrument, the researchers formulate research questions
according to the study objectives and questions. Thereafter researchers present the formulated
question in a questionnaire to the supervisor DR Isaiah miencha who verified it. The coefficient of
validity will determined with the help of the content valid index which gave 0.79. Since alpha was above
0.6, the instrument will regarded valid for the study.

Content validity index = Number of relevant items

Total numbers of items in the questionnaire

Reliability of the study

To measure the consistency and accuracy of the research instrument, a pretest of the 10 questionnaire
questions will carried out in Wandegeya where there are similar retail shops to ensure that the relevant
information will gather. Out of the pretest, a coefficient of 0.863 was gotten. This rendered the
instrument reliable as recommended by Cronbach’s alpha measure of internal consistency and
reliability.

Data Analysis

Data analysis at this stage referred to editing, coding, data entry and tabulation so that the data will be
accurate before data analysis will be done.

After the data has been collected from the field, it is edit, coded and then coded into the computer.

By use of SPSS software, the data will analyze. Objective 1&2 will analyze using descriptive statistics
whereby the results are tabulate into the frequency and percentage tables. Objective 3 will analyze and
determined using Pearson’s correlation moment.

Data collection procedures

The researchers get an authorization letter from the director, Bugema University, Kampala campus for
the data collection. Thereafter, the letter will present to the local authorities and the owners of the
SMEs to get permissions for data collection. Questionnaires are administer face-to-face whereby the
respondents filled them with the help of the researchers because some respondents needed
interpretation of the questions so they will give the right answers.

References
APPENDICES

APPENDICE 1; QUESTIONNIRE

CASH MANAGEMENT AND SUSTAINABILITY OF SMALL SCALE RETAILSHOPS IN KOKINI TRADING AREA

Dear respondent

We, Nkoola Ibrahim, Kimenyi Alexis and Ndabashinze Cedric are students of Bugema university
kampala campus pursuing a bachelor’s degree in business administration . We are carrying out a
research on cash management and sustainability of small scale retail shops in kokoni trading area. All
the information provided will be highly confidential, thus your name will not appear anywhere. You
response will be appreciated.

SECTION A; Bio-data

Kindly tick (^) where appropriate

1. Gender

1 Male ( ) 2 female ( )

2. age

1 Below 25years ( ) 2 25-30years ( ) 3 31-35years ( )4 35-40years ( )

3. education level

1Primary level ( ) 2 secondary level ( ) 3 certificate level ( ) 4 diploma level ( ) 5 degree

( ) 6level others ( )

4. I use cash in the business

1Daily ( ) 2 weekly ( ) 3 monthly ( ) 4 others ( )

5. how long have you been in this business?

1Below 1year ( ) 2 1-5years ( ) 3 6-10years ( ) 4 10years and above ( )

6. how long are you expecting to stay in this business you are operating?

1 Below 1year ( ) 2 1-5years ( ) 3 6-10years ( ) 4 10years ( )

 SECTIONB

Kindly tick where appropriate

How cash is managed in small scale retail shops in kikoni trading area using the following indicators

1 Accountability

4= strongly agree 3=agree 2=disagree 1= strongly disagree 4 3 2 1

7 The shop manager records all cash received from the business transaction

8 The shop keeper records all cash spent out of the business

9 Compare the cash received and cash paid out by the business for business
transaction for proper cash management

2 financial budgeting

12 We make a simple budget periodically and budget is used as major planning

tool

13 we compare planned and actual expenditure to see whether there is under

or over utilization of cash

14 We can never spend any cash if it has not been budgeted for

3 management of return on capital employed

16 Have appositive return on capital employed which helps me to keep in
business

17 I monitor every investment made to ensure that the returns are positive
which returns help me keep in business

18 I monitor every investment made to ensure that the returns are positive
which returns help me keep in business

Section C :

How sustainability is realizes in small scale retail shops in kikoni trading area

1. Expansion

4= strongly agree 3=agree 2=disagree 1= strongly disagree 4 3 2 1

20 I invest surplus cash in the business so as to expand my business

21 I increase the volume of the goods offered to meet every need and satisfy my
customers and this has enhanced their loyalty

22 I satisfy my customers and so they come regurlarly to buy form my shop

2. Continuity of the business

4= strongly agree 3=agree 2=disagree 1= strongly disagree 4 3 2 1

25 I keep in business even when profits or losses are made

26 I save cash that I expect to use to meet the future unexpected costs

27 I am in business today because of the past records and proper cash

management through accountability and financial budgeting
krejcie and morgan table
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