Effect Of Working Capital On Financial Performance Of Listed Manufacturing Firms In The Nairobi Securities Exchange
Abstract
The study sought to analyze the effects of working capital on financial performance of
listed manufacturing companies in the Nairobi Securities Exchange. The specific research
objectives were to analyze the effect of accounts collection period on financial
performance of listed manufacturing companies in Nairobi Securities Exchange, to
determine the impact of accounts payable period on financial performance of listed
manufacturing firms in Nairobi Securities Exchange, to examine the impact of firm size
on financial performance of listed manufacturing firms in Nairobi Securities Exchange
and to determine the impact of capital structure on financial performance of listed
manufacturing firms in Nairobi Securities Exchange. The study adopted a descriptive
research design and incorporated a census study for all listed manufacturing firms at NSE
Kenya that provided an insight analysis for the variables. The study target population was
based on the listed firms in the Nairobi Securities Exchange. The study exclusively relied
on secondary data obtained from the selected company’s audited annual financial
statements and presented by the Nairobi Securities Exchange’s Handbook. Data analysis
of the current study was done via use of descriptive and quantitative techniques.
Statistical Package for Social Sciences version 23 was used and the output generated. The
result indicated that there was a negative Spearman’s correlation between ROA and
accounts collection period r = - .332.Spearman’s Correlation between account payables
period and ROA was also negative with r = -0.177. An increase of firm size resulted in an
increase of financial performance for the firms, similarly increase in debt to equity ratio
also led to increase in financial performance for the firms. It was recommended that the
government puts up supportive business infrastructure to facilitate smooth operations of
manufacturing firms. The management of these firms should reconsider their working
capital management techniques
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
- School of Business [1411]
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