A Critical Review on Working Capital Management and Financial Distress in Chartered Public Universities in Kenya


  • Jemimah Eboyi Minyoso PhD Student, School of Business, Masinde Muliro University of Science and Technology https://orcid.org/0000-0002-4331-4363
  • Willies Otuya Professor of Entrepreneurship, School of Business, Masinde Muliro University of Science and Technology




Chartered Public Universities, Financial Distress, Working Capital Management


Working capital management is a matter of concern in public universities in Kenya, with the main challenge being how to prudently manage assets in order to achieve financial self-sufficiency. Working capital management impacts the financial health of an organisation. Both public and private sector entities are prone to mismanagement of some kind, not only in Kenya but also regionally and globally. The PRISMA guidelines were adopted in the systematic review process, where 55 articles were narrowed down to the final 11 articles. From the reviewed papers, poor management of the components of working capital management was concluded to have caused financial distress. Other aspects, like funding and government policy, are other contributing factors. The reviewed literature on working capital management is the major one. The reviewed literature was anchored on several theories, which include financial distress theory, working capital management theory, free cash flow theory, cash conversion cycle theory, and Altman's Z score model. The study topics were tested using the initial inclusion criteria by analysing the key words used in the studies. The key words sought were working capital, working capital management, and financial distress. Most of the data used in the reviewed studies was secondary. The reviewed literature was for a period of ten years, ranging from 2013 to 2022, as published in journals and full papers. The data was organised by panel data technique, and financial ratios were computed using the three-statement model, which is basically an integrated financial statement model that comprises a balance sheet, income statement, and cash flow statement linked together. Content analysis has been used for the analysis. The results revealed that few studies have been conducted in public universities, while the majority were done in Kenya’s manufacturing sector. The studies reported mixed results on the relationship between financial distress and working capital management. The outcome becomes more confounded when more than two measures are used to conceptualise working capital management. Therefore, further studies ought to be conducted in public universities in Kenya by blending both secondary and primary data and also considering other research designs with the inclusion of a moderating variable such as government policies.


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How to Cite

Minyoso, J. E., & Otuya, W. (2023). A Critical Review on Working Capital Management and Financial Distress in Chartered Public Universities in Kenya. African Journal of Empirical Research, 4(2), 181–189. https://doi.org/10.51867/ajernet.4.2.20