The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya

Winnie Mokeira Nyabuti; Ondiek Benedict Alala

doi:doi:10.11648/j.ijefm.20140203.12

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The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya

Winnie Mokeira Nyabuti, Ondiek Benedict Alala

Published in International Journal of Economics, Finance and Management Sciences (Volume 2, Issue 3)

Received: 9 May 2014 Accepted: 29 May 2014 Published: 30 May 2014

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Abstract

Working capital management and profitability relationship has been explored by many researchers. The study’s research objectives include: To find out the relationship between working capital management policy and financial performance of companies quoted at NSE, to find out if efficient Aggressive Investment Policy has any effect on the ROA of companies quoted at NSE, to establish if Aggressive Financing Policy influences ROA of the firm at NSE, to establish the influence of working capital management policy on financial performance. The population of the study includes ten companies listed at the NSE for five years from 2008 to 2012. From the Nairobi Securities Exchange hand book (2012) sixty two firms are listed, drawn from the agriculture sector, Commercial and services, Financial and Investments, Industrial and allied Sector, Alternative Investment Market Segment. Firms quoted at NSE are preferred due to the availability and reliability of the financial statements in that they are subject to mandatory audits by recognised audit firms. The study utilised secondary data obtained from the published financial statements which were readily available at the NSE and the CMA libraries. The data collected included information on assets, liabilities and revenue levels for the period 2008 to 2012, using the annual reports published by the above mentioned companies which have been listed by NSE. Further the data was obtained from the annual handbook published by NSE.The study concludes that there is an existing relationship between working capital management policy and financial performance of companies quoted at NSE. The dependent variable which was ROA is influenced by the independent variables which are AIP and AFP by 17.2%. This means that 17.2% of the changes in depended variable (ROA) can be explained by explanatory variables while 82.8% cannot be explained by explanatory variables hence error term.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 2, Issue 3)
DOI	10.11648/j.ijefm.20140203.12
Page(s)	212-219
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Working Capital Management Policy, Financial Performance, Aggressive Financing Policy, Aggressive Investment Policy and Return on Assets

References

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APA Style

Winnie Mokeira Nyabuti, Ondiek Benedict Alala. (2014). The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya. International Journal of Economics, Finance and Management Sciences, 2(3), 212-219. https://doi.org/10.11648/j.ijefm.20140203.12

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ACS Style

Winnie Mokeira Nyabuti; Ondiek Benedict Alala. The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya. Int. J. Econ. Finance Manag. Sci. 2014, 2(3), 212-219. doi: 10.11648/j.ijefm.20140203.12

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AMA Style

Winnie Mokeira Nyabuti, Ondiek Benedict Alala. The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya. Int J Econ Finance Manag Sci. 2014;2(3):212-219. doi: 10.11648/j.ijefm.20140203.12

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@article{10.11648/j.ijefm.20140203.12,
  author = {Winnie Mokeira Nyabuti and Ondiek Benedict Alala},
  title = {The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {2},
  number = {3},
  pages = {212-219},
  doi = {10.11648/j.ijefm.20140203.12},
  url = {https://doi.org/10.11648/j.ijefm.20140203.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20140203.12},
  abstract = {Working capital management and profitability relationship has been explored by many researchers. The study’s research objectives include: To find out the relationship between working capital management policy and financial performance of companies quoted at NSE, to find out if efficient Aggressive Investment Policy has any effect on the ROA of companies quoted at NSE, to establish if Aggressive Financing Policy influences ROA of the firm at NSE, to establish the influence of working capital management policy on financial performance. The population of the study includes ten companies listed at the NSE for five years from 2008 to 2012. From the Nairobi Securities Exchange hand book (2012) sixty two firms  are listed, drawn from the agriculture sector, Commercial and services, Financial and Investments, Industrial and allied Sector, Alternative Investment Market Segment. Firms quoted at NSE are preferred due to the availability and reliability of the financial statements in that they are subject to mandatory audits by recognised audit firms. The study utilised secondary data obtained from the published financial statements which were readily available at the NSE and the CMA libraries. The data collected included information on assets, liabilities and revenue levels for the period 2008 to 2012, using the annual reports published by the above mentioned companies which have been listed by NSE. Further the data was obtained from the annual handbook published by NSE.The study concludes that there is an existing relationship between working capital management policy and financial performance of companies quoted at NSE. The dependent variable which was ROA is influenced by the independent variables which are AIP and AFP by 17.2%. This means that 17.2% of the changes in depended variable (ROA) can be explained by explanatory variables while 82.8% cannot be explained by explanatory variables hence error term.},
 year = {2014}
}

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TY  - JOUR
T1  - The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya
AU  - Winnie Mokeira Nyabuti
AU  - Ondiek Benedict Alala
Y1  - 2014/05/30
PY  - 2014
N1  - https://doi.org/10.11648/j.ijefm.20140203.12
DO  - 10.11648/j.ijefm.20140203.12
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 212
EP  - 219
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20140203.12
AB  - Working capital management and profitability relationship has been explored by many researchers. The study’s research objectives include: To find out the relationship between working capital management policy and financial performance of companies quoted at NSE, to find out if efficient Aggressive Investment Policy has any effect on the ROA of companies quoted at NSE, to establish if Aggressive Financing Policy influences ROA of the firm at NSE, to establish the influence of working capital management policy on financial performance. The population of the study includes ten companies listed at the NSE for five years from 2008 to 2012. From the Nairobi Securities Exchange hand book (2012) sixty two firms  are listed, drawn from the agriculture sector, Commercial and services, Financial and Investments, Industrial and allied Sector, Alternative Investment Market Segment. Firms quoted at NSE are preferred due to the availability and reliability of the financial statements in that they are subject to mandatory audits by recognised audit firms. The study utilised secondary data obtained from the published financial statements which were readily available at the NSE and the CMA libraries. The data collected included information on assets, liabilities and revenue levels for the period 2008 to 2012, using the annual reports published by the above mentioned companies which have been listed by NSE. Further the data was obtained from the annual handbook published by NSE.The study concludes that there is an existing relationship between working capital management policy and financial performance of companies quoted at NSE. The dependent variable which was ROA is influenced by the independent variables which are AIP and AFP by 17.2%. This means that 17.2% of the changes in depended variable (ROA) can be explained by explanatory variables while 82.8% cannot be explained by explanatory variables hence error term.
VL  - 2
IS  - 3
ER  -

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Author Information

Winnie Mokeira Nyabuti

School of Human Resource Development, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya
Ondiek Benedict Alala

School of Accounting and Finance, University of Kabianga, Kericho, Kenya

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APA Style

Winnie Mokeira Nyabuti, Ondiek Benedict Alala. (2014). The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya. International Journal of Economics, Finance and Management Sciences, 2(3), 212-219. https://doi.org/10.11648/j.ijefm.20140203.12

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ACS Style

Winnie Mokeira Nyabuti; Ondiek Benedict Alala. The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya. Int. J. Econ. Finance Manag. Sci. 2014, 2(3), 212-219. doi: 10.11648/j.ijefm.20140203.12

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AMA Style

Winnie Mokeira Nyabuti, Ondiek Benedict Alala. The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya. Int J Econ Finance Manag Sci. 2014;2(3):212-219. doi: 10.11648/j.ijefm.20140203.12

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@article{10.11648/j.ijefm.20140203.12,
  author = {Winnie Mokeira Nyabuti and Ondiek Benedict Alala},
  title = {The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {2},
  number = {3},
  pages = {212-219},
  doi = {10.11648/j.ijefm.20140203.12},
  url = {https://doi.org/10.11648/j.ijefm.20140203.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20140203.12},
  abstract = {Working capital management and profitability relationship has been explored by many researchers. The study’s research objectives include: To find out the relationship between working capital management policy and financial performance of companies quoted at NSE, to find out if efficient Aggressive Investment Policy has any effect on the ROA of companies quoted at NSE, to establish if Aggressive Financing Policy influences ROA of the firm at NSE, to establish the influence of working capital management policy on financial performance. The population of the study includes ten companies listed at the NSE for five years from 2008 to 2012. From the Nairobi Securities Exchange hand book (2012) sixty two firms  are listed, drawn from the agriculture sector, Commercial and services, Financial and Investments, Industrial and allied Sector, Alternative Investment Market Segment. Firms quoted at NSE are preferred due to the availability and reliability of the financial statements in that they are subject to mandatory audits by recognised audit firms. The study utilised secondary data obtained from the published financial statements which were readily available at the NSE and the CMA libraries. The data collected included information on assets, liabilities and revenue levels for the period 2008 to 2012, using the annual reports published by the above mentioned companies which have been listed by NSE. Further the data was obtained from the annual handbook published by NSE.The study concludes that there is an existing relationship between working capital management policy and financial performance of companies quoted at NSE. The dependent variable which was ROA is influenced by the independent variables which are AIP and AFP by 17.2%. This means that 17.2% of the changes in depended variable (ROA) can be explained by explanatory variables while 82.8% cannot be explained by explanatory variables hence error term.},
 year = {2014}
}

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TY  - JOUR
T1  - The Relationship between Working Capital Management Policy and Financial Performance of Companies Quoted at Nairobi Securities Exchange, Kenya
AU  - Winnie Mokeira Nyabuti
AU  - Ondiek Benedict Alala
Y1  - 2014/05/30
PY  - 2014
N1  - https://doi.org/10.11648/j.ijefm.20140203.12
DO  - 10.11648/j.ijefm.20140203.12
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 212
EP  - 219
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20140203.12
AB  - Working capital management and profitability relationship has been explored by many researchers. The study’s research objectives include: To find out the relationship between working capital management policy and financial performance of companies quoted at NSE, to find out if efficient Aggressive Investment Policy has any effect on the ROA of companies quoted at NSE, to establish if Aggressive Financing Policy influences ROA of the firm at NSE, to establish the influence of working capital management policy on financial performance. The population of the study includes ten companies listed at the NSE for five years from 2008 to 2012. From the Nairobi Securities Exchange hand book (2012) sixty two firms  are listed, drawn from the agriculture sector, Commercial and services, Financial and Investments, Industrial and allied Sector, Alternative Investment Market Segment. Firms quoted at NSE are preferred due to the availability and reliability of the financial statements in that they are subject to mandatory audits by recognised audit firms. The study utilised secondary data obtained from the published financial statements which were readily available at the NSE and the CMA libraries. The data collected included information on assets, liabilities and revenue levels for the period 2008 to 2012, using the annual reports published by the above mentioned companies which have been listed by NSE. Further the data was obtained from the annual handbook published by NSE.The study concludes that there is an existing relationship between working capital management policy and financial performance of companies quoted at NSE. The dependent variable which was ROA is influenced by the independent variables which are AIP and AFP by 17.2%. This means that 17.2% of the changes in depended variable (ROA) can be explained by explanatory variables while 82.8% cannot be explained by explanatory variables hence error term.
VL  - 2
IS  - 3
ER  -

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