WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF ENERGY AND PETROLEUM FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF ENERGY AND PETROLEUM FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
Anthony Muema Ithanzu - Masters Student, Kenyatta University, Kenya
Dr. Peter Ng’ang’a - Department of Accounting and Finance, Kenyatta University, Kenya
ABSTRACT
The profitability of the energy and petroleum corporations trading at the Nairobi Securities Exchange continues to decline and erratically fluctuate despite utilizing working capital management measures as demonstrated over a ten-year period from 2014 and ending in 2023. For the utilization of working capital management measures was intended to improve the profitability yet the profitability of energy corporations trading at the Nairobi Securities Exchange persists in being erratic. Consequently, it is uncertain if working capital management substantially influences the profitability of energy companies traded on the Nairobi Securities Exchange. Therefore, this exploration aimed to determine the influence of working capital management on profitability of energy corporations traded at the Nairobi Securities Exchange Nairobi Securities Exchange. The research’s specific goal was to assess the influence of accounts payable management on profitability of energy and petroleum firms trading at the Nairobi Securities Exchange. Research hypotheses was tested at 0.05 significance level. This research was dictated by Contingency Theory and Agency Theory. The research adopted causal effect research approach. The intended audience was the four energy and petroleum firms traded at the Nairobi Securities Exchange as a unit of analysis and the audited financial statements as the unit of observation with forty data point observations. Census was adopted since the population is small. The analysis encompasses a ten-year period from 2014 to 2023. Secondary data was acquired via a data abstraction tool. A panel regression model was employed. Descriptive statistics, including mean and standard deviation, alongside inferential statistics, was employed for data analysis. The diagnostic tests were steered prior to the definite analysis. The information was exhibited through tabular, graphs, and frequency distributions. The research complied with ethical guidelines properly. The research found that there is statistically significant and favourable influence of accounts payable management on profitability of energy and petroleum firms listed in the Nairobi Securities Exchange with P-value 0.010<0.05. The study recommends that energy and petroleum firms traded at the NSE should ensure efficient management of accounts payables which is essential for any organization, involving tasks such as invoice processing, maintaining vendor interactions. Effective accounts payable management enhances cash flow, reduces costs, and nurtures robust supplier relationships.
