Browsing by Author "Njagi, Peninah Nyaguthii"

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    Working Capital Management and Profitability of Tea Factories Managed by KTDA in Kirinyaga and Embu Counties – Kenya
    (Kenyatta University, 2024-07) Njagi, Peninah Nyaguthii; Gitagia, Francis
    The current study seeks to establish the effect of working capital management and profitability of tea factories in Kirinyaga and Embu Counties, Kenya. The overall objective of the current study was to ascertain the effect of working capital management and profitability of tea factories in Kirinyaga and Embu Counties, Kenya. The main objective of the study was to determine the influence of working management practices on profitability of tea factories in Kirinyaga and Embu Counties, Kenya. The research was anchored on pecking order theory, transaction cost theory, financing advantage theory, and cash conversion cycle. The study found the existence of a strong and positive correlation between Average payment period, Average Collection Period, Inventory turnover, and Cash Conversion on financial profitability of tea processing factories. Average payment period helps to manage WC since delays in bill payments is an approach that can help factories to access cheaper or competitive sources of funds. There was a positive correlation between inventory turnover and profitability performance in tea factories. Efficient and effective management of inventory enables business survival, profit maximization, and an efficient management of working capital. The study established a positive association between accounts receivable and profitability performance among tea factories, where a unit change in Average Collection Period has a positive change on profit performance in tea factories. Effective management of accounts receivables results in enhanced liquidity that enables tea factories to meet and realize their financial commitments and equally be able to seize opportunities emerging in the market. In conclusion, there is a positive relationship between Average payment period and profitability. Credit collection policies that enable low Average Collection Period will ensure healthy cash flows and enhanced liquidity position for the firm. Effective and efficient management of receivables results in the increase of firm size, sale, and enhanced liquidity. Inventory turnover negatively impacts profitability performance in tea factories, while efficient inventory management and effective control helps in achieving adequate operational results and lessening investment in working capital. Consequently, the study recommends that: factory firms should maintain optimal levels of financial leverage Tea factories must create a credit collection policy detailing the practices and procedures to be applied by the factories to achieve outstanding AR. Tea factories should generally maintain Average payment period higher than Average Collection Period to lessen investment in receivables, meet short time obligations and minimize cost of funds
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    Working Capital Management and Profitability of Tea Factories Managed By Ktda in Kirinyaga and Embu Counties, Kenya
    (Kenyatta University, 2024-12) Njagi, Peninah Nyaguthii
    Current data on tea factories in Kirinyaga and Embu counties show inconsistent variations in net profitability across all the firms in the region over the past five years. The current study seeks to establish the effect of working capital management and profitability of tea factories in Kirinyaga and Embu Counties, Kenya. The overall objective of the current study was to establish the effect of working capital management and profitability of tea factories in Kirinyaga and Embu Counties, Kenya. The specific objectives of the study were: to analyse the effect of inventory management on profitability of tea factories, to determine the effect of account receivable Management on profitability of tea factories, to explore the effect of accounts payable Management on profitability of tea factories, to ascertain the effect of cash conversion cycle on profitability of tea factories in Kirinyaga and Embu Counties, Kenya. The study was informed by current literature and was anchored on pecking order theory, transaction cost theory, financing advantage theory, and cash conversion cycle. The focus population in this study involves all the 8 tea manufacturing factories in Kirinyaga and Embu counties that are managed by Kenya Tea Development Agency. The study used a descriptive research approach to meet its objectives. Data was extracted from financial statements from the eight tea factories within the two selected counties. Different tests, including correlation analysis, Analysis of Variance (ANOVA), multicollinearity checks to establish the stability and reliability of regression coefficients, and non-parametric tests. The analysis results were presented in tables, graphs, and pie charts. Throughout the research process, the researcher observed all ethical requirements, including obtaining informed consent, maintaining confidentiality, anonymity, and privacy, and observing academic integrity. The study found the existence of a strong and positive correlation between APP, ACP, Inventory turnover, and CC on financial profitability of tea processing factories. AP helps to manage WC since delays in bill payments is an approach that can help factories to access cheaper or competitive sources of funds. There was a positive correlation between inventory turnover and profitability performance in tea factories. Efficient and effective management of inventory enables business survival, profit maximization, and an efficient management of working capital. The study established a positive association between accounts receivable and profitability performance among tea factories, where a unit change in ACP has a positive change on profit performance in tea factories. Effective management of accounts receivables results in enhanced liquidity that enables tea factories to meet and realize their financial commitments and equally be able to seize opportunities emerging in the market. In conclusion, there is a positive relationship between APP and profitability. Credit collection policies that enable low ACP will ensure healthy cash flows and enhanced liquidity position for the firm. Effective and efficient management of receivables results in the increase of firm size, sale, and enhanced liquidity. Inventory turnover negatively impacts profitability performance in tea factories, while efficient inventory management and effective control helps in achieving adequate operational results and lessening investment in working capital. Consequently, the study recommends that: factory firms should maintain optimal levels of financial leverage Tea factories must create a credit collection policy detailing the practices and procedures to be applied by the factories to achieve outstanding AR. Tea factories should generally maintain APP higher than ACP to lessen investment in receivables, meet short time obligations and minimize cost of funds.