Browsing by Author "Oloo, Ronald Ouma"

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    Working Capital Management And Financial Sustainability Of Commercial State Corporations In Kenya
    (Kenyatta University, 2025-11) Oloo, Ronald Ouma
    The economic development of Kenya substantially depends on Commercial State Corporations which supply vital infrastructure and energy and transportation services. However, many Commercial State Corporations face financial sustainability challenges due to rising debt levels and operational inefficiencies. The Auditor General's 2024 report highlights deteriorating financial stability in key Commercial State Corporations, evidenced by declining interest coverage ratios and rising interest expenses. Despite the recognized importance of working capital management in ensuring financial sustainability, limited empirical studies have explored its effect on Commercial State Corporations in Kenya. This study aimed to examine the effect of working capital management on the financial sustainability of commercial state corporations in Kenya. The study was guided by the following specific objectives: to determine the effect of cash management, accounts payable management and accounts receivable management on financial sustainability. The research was anchored transactional cost Theory, Agency Theory and Cash Conversion Theory, which provide insights into financial decision-making, capital structure, and resource utilization within organizations. The study adopted an explanatory research design to establish the causal relationship between working capital management practices and financial sustainability. The target population comprised six major Commercial State Corporations. Data was obtained from a census study that examines secondary financial statement audit reports of these institutions from 2019 through 2024. The descriptive analysis generated financial summary trends through combinations of mean values and standard deviations and percentage information. Using panel regression analysis inferential testing was done. Diagnostic tests were carried out to test the assumptions of the study. Ethical considerations were done where the researcher was guided by etical codes of conduct. The research confirmed that effective cash management produces a positive statistical relationship to financial sustainability (p < 0.05) while optimized cash conversion cycles enhance both liquidity and decrease financial risks. The research showed that effective management of accounts receivable directly impacts financial sustainability (p < 0.05) by enabling faster collection of receivables and implementing stricter credit controls to achieve better financial results. The financial sustainability of commercial state corporations in Kenya shows a direct statistical relationship between cash, accounts receivable and accounts payable. Organizations need strong working capital management systems to improve their financial stability and organizational sustainability while ensuring better liquidity. Commercial state corporations need to establish formal cash management systems that track cash flows in real time through centralized pooling systems to maximize liquidity and minimize borrowing needs. The improvement of receivables management requires corporations to deploy automated systems and create credit control policies and train their staff in risk-based credit management. Standardized accounts payable policies should determine payment schedules while prioritizing critical suppliers and utilizing early payment discounts to protect both trust and service delivery. The government and regulators must enforce compliance by integrating these working capital practices into performance contracts and public audit frameworks to ensure financial sustainability and transparency