Version 1
: Received: 13 June 2024 / Approved: 13 June 2024 / Online: 13 June 2024 (15:36:44 CEST)
How to cite:
Wanzala, R. W.; Obokoh, L. The Effects of Working Capital Management on the Financial Performance of Commercial and Services Firms Listed at Nairobi Securities Exchange in Kenya. Preprints2024, 2024060959. https://doi.org/10.20944/preprints202406.0959.v1
Wanzala, R. W.; Obokoh, L. The Effects of Working Capital Management on the Financial Performance of Commercial and Services Firms Listed at Nairobi Securities Exchange in Kenya. Preprints 2024, 2024060959. https://doi.org/10.20944/preprints202406.0959.v1
Wanzala, R. W.; Obokoh, L. The Effects of Working Capital Management on the Financial Performance of Commercial and Services Firms Listed at Nairobi Securities Exchange in Kenya. Preprints2024, 2024060959. https://doi.org/10.20944/preprints202406.0959.v1
APA Style
Wanzala, R. W., & Obokoh, L. (2024). The Effects of Working Capital Management on the Financial Performance of Commercial and Services Firms Listed at Nairobi Securities Exchange in Kenya. Preprints. https://doi.org/10.20944/preprints202406.0959.v1
Chicago/Turabian Style
Wanzala, R. W. and Lawrence Obokoh. 2024 "The Effects of Working Capital Management on the Financial Performance of Commercial and Services Firms Listed at Nairobi Securities Exchange in Kenya" Preprints. https://doi.org/10.20944/preprints202406.0959.v1
Abstract
Working capital management (WCM) is critical because it affects a company's profitability, liquidity, and investment decisions, all of which have an impact on financial performance. As a result, effective and efficient working capital management is an essential component for commercial and service businesses. Given the importance of the commercial and services industries to the Kenyan economy, the goal of this research was to look into the impact of working capital management on the financial performance of these firms, particularly those listed on the Nairobi Securities Exchange (NSE), from 2003 to 2022. Working capital management was measured using the average age of inventory, average collection period, average payment period, and cash conversion cycle, whereas financial performance was measured using return on asset, return on equity, and net operating profit margin. Using panel regression analysis, the results showed that the average inventory age, average collection period, average payment period, and cash conversion cycle were all negatively related to financial performance for NSE-listed commercial and services firms. Based on the findings, it is recommended that Kenyan commercial and services firms adopt prudent optimal working capital management practices in order to improve firm financial performance and maximize shareholder wealth.
Keywords
commercial and services firms; financial performance; Nairobi Securities Exchange; net operating profit margin working capital management
Subject
Business, Economics and Management, Finance
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
