Working capital components and financial performance of small and medium enterprises in Jaffna district

Small and Medium Enterprises (SMEs) are being an important back born of the Sri Lanka economy and this is the sector strengthening the continuous and sustainable economic development of Sri Lanka. Working Capital components are playing a critical role in the short term liquidity solution and long term sustainability of a SME‘s in Sri Lanka. Success or failure of SME‘s decided by the working capital components. In this study we are going to identify the main working capital components which needs to be manage very carefully for the success of the SME‘s. Also the study going to identify how Working Capital components influencing the financial performance of SMEs in Jaffna district and Sri Lanka. Primary data were used as the data source of this study. Data were collected using questionnaire and analyzed those using descriptive statistics, correlation and regression analysis. Government of Sri Lanka should support for SME,s to manage their Working Capital properly by training, educating, advising and financially supporting the SMEs during their critical period. Finally, SMEs should understand the important of Working Capital Components for the success of the organization in short run. We can ensure that successful management of Working Capital Components will lead the sustainable growth of the SME,s in Jaffna district.