| dc.description.abstract | Accounts receivable of a firm is a legally enforceable claim for payment from a business
to its customers / clients for goods supplied and / or services rendered in execution of the
customers order. On the balance sheet, it is reported as a current asset and is considered
part of an organization’s working capital. The foundation behind accounts receivable is a
firm’s policies and procedures for sales. A system must be in place to track accounts
receivable. This should include balance forwards, listing of all open invoices and
generation of monthly statements to customers. An aging of receivables should be used to
collect overdue accounts. Many organizations today are faced with the problem of
having huge accumulated balances owing to accounts receivables which are sometimes
written off and thus interfering with the organizations operations. The purpose of the
study is to establish how Accounts receivable management tries to minimize the amounts
of money tied up in form of accounts receivables and thus takes the organization back to
its original set goals. This study describes target population comprising of all the
manufacturing firms in Nakuru municipality which is the sample and census will be
employed as the population is less than 30. There are 25 manufacturing companies within
the municipality. The reason for focusing on this sector is because it constitutes a larger
part of the manufacturing sector which contributes a substantial percentage of output to
the gross domestic product of Kenya. The period between 2008 and 2013 is sufficient
enough to enable appropriate assessment of the accounts receivable management by the
manufacturing firms in the municipality. The accounts receivable will be measured using
ratios such as turnover ratio which is an accounting measure used to quantify firms
effectiveness in extending credit as well as collecting debts. This ratio is an activity ratio,
measuring how efficiently a firm uses its assets. Measures such as days sales outstanding
(DSO) which is a measure of the average number of days a company takes to collect
revenue after a sale has been made will also be looked into to help in the management of
the accounts receivable. A/R at year end as a percentage of total sales ratio computed by
dividing the fiscal year end A/R balances by fiscal year net sales will also be used,
accounts receivable aging schedule which is a periodic report used to determine the
priorities of collection activities will also be helpful in the management of the accounts
receivables. Bad debt expense as a percentage of total sales ratio computed by dividing
year end bad debts expenses by net sales. The study will be based on theories such as
trade-off theory and pecking order theory. Descriptive survey research design will be
adopted.. Therefore, the study will employ a purposive sampling, thus judgment sampling
to be particular. The main source of information will be the secondary. Data will be
analyzed using regression analysis method in a way to form a trend analysis enabling the
determination of the impact of debt to on the performance of the firms. | en_US |
