Abstract:
The aim of this study was to assess the impact of Cash Flows on Financial Performance of
SACCOS in Arusha City. Basically it was focused on cash flows – net income and returns on
assets. Related literature reviews both theoretical and empirical were reviewed to expand the
knowledge about the study. The study was conducted in Arusha City Council where giant
SACCOS with sustainable growth are found. It is also one of the potential business centers in
Tanzania which bring worth financial services opportunity. Descriptive research design was
applied to describe the relationship between variables. Simple random sampling method was
used in obtaining samples from the total population. The use of the method reduced biasness and
resource utilization in accomplishing the study. Data collection method employed in this study
was quantitative data based on Secondary data. It was extracted from financial audited report of
the sampled SACCOS to minimize cost and time. Data were analyzed using STRATA, computer
software package. Vector Auto Regression Model and Vector Error Correction Model were
applied to test for causal relationship and co-integration between variables. The study findings
revealed that co-integration exist between Cash Flows – Net Income and Returns on Assets.
Findings also revealed that Cash flows – Net Income granger cause Returns on Assets as well as
Returns on Assets granger cause Cash flows – Net Income. In this study also revealed that long
run and short run causality exists between variables. The Serial correlation and Normality were
used to validate models applied in this study. The study validates that Cash flows has significant
impact on SACCOS’s financial performance at a given time period.
