The Influence of Working Capital Management on the Financial Performance of the Listed Manufacturing Firms in Tanzania

This study examines the impact of working capital management (WCM) on the financialperformance of manufacturing firms listed on Dar es salaam Stock Exchange (DSE) in Tanzaniafrom 2003-2021 using the Generalized Method of Moment (GMM) estimation method for analysis.WCM measures include accounts receivable (AR), accounts payable (AP), cash conversion cycle(CCC), inventory turnover (INV), working capital investing policy (WCIP), and working capitalfinancing policy (WCFP) while financial performance is gauged through operating profit margin(OPM); return on assets (ROA); return on capital employed (ROCE) and return on equity (ROE).The study shows that most working capital management (WCM) measures significantly influencemanufacturing firms' financial performance, except for WCIP and WCFP. Notably, AR and INVnegatively affect OPM and ROA due to inefficiencies in cash conversion, but they enhance ROCE.Extending AP improves ROA but harms ROCE, while CCC positively impacts OPM and ROA butnegatively affects ROCE. Practical implications highlight the need to balance accounts payableperiods to avoid negative impacts on ROCE and efficiently manage AR and INV to improve cashflow without hurting operational efficiency and asset utilization. Regularly adjusting the CCC isessential to maintain positive impacts on OPM and ROA while minimizing adverse effects onROCE.