Effect Of Working Capital Management On The Financial Performance Of The Companies Listed At The Nairobi Securities Exchange

Abstract

The main goal for the paper was to establish the impact of working capital management on the financial performance of the companies quoted under the NSE of Kenya. The study period was a five-year period from 2013 to 2017. The study involved the use of a descriptive research design using a sample of 20 quoted firms under the NSE. Secondary data from the audited financial statements of the listed companies and the NSE's reports were used. The data collected was systematically arranged in a way that aided the analysis using the Statistical Package for Social Sciences. Data was analyzed on the basis of the mean and the F test statistic was computed at 5% significance by regression analysis. To check for the model’s strength and the effect of the management of working capital on the financial performance of the quoted firms under the NSE of Kenya, the paper did an analysis of variance (ANOVA). From the findings, the adjusted R square was 0.062 which implies that 6.2% of the influence of liquidity, leverage and firm size on the performance was explained by the model. This paper concluded that the management of working capital affects the financial performance of the quoted firms under the NSE of Kenya. This paper recommends that companies have to make sure of appropriate mechanisms are established so as to guarantee the payables, receivables and inventories are managed properly to guarantee better financial results.