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EFFECT OF WORKING CAPITAL MANAGEMENT ON THE PROFITABILITY OF CONSTRUCTION AND ALLIED FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE

Managing the liquidity of an organization is imperative for all businesses; large, small or medium. If an organization fails to manage its liquidity appropriately, there is bound to be cash shortages. As a result, the organization experience issues in settling its debts. No evidence of WCM's positive effect on productivity in Kenyan manufacturing or associated companies has been shown in the existing literature. Both quantitative and qualitative methods of analysis were employed in this study. Information regarding characteristics of a phenomenon or population is what you may expect to find in descriptive studies. Nevertheless, descriptive studies are often conducted before quantitative ones. Stata and Microsoft Excel were used for the analysis. We used a quantitative approach to arrive at our conclusions. Through the use of regression and correlation analysis, we were able to ascertain the nature and extent of the partnership and the bearing of working capital management elements on efficiency indicators. Inventory turnover time was shown to have a positive influence on profitability for this organization, albeit the results were not statistically significant. It follows that the manufacturing and construction sectors' financial results are immune to variations in inventory turnover time. This fits very well with what's been written. Results showed that for NSE-listed manufacturing and associated businesses, the average payment duration had a positive but statistically negligible influence on profitability. This study lends credence to previous studies which found no correlation between payment terms and business outcomes. There was a marginally positive effect on financial outcomes, but it was attributed to the longer average collection time. The findings prove that a company's bottom line is immune to payment collection delays.

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Author: dongmei li
Contributed by: zemuhindi
Institution: university of nairobi
Level: university
Sublevel: post-graduate
Type: dissertations