BibTeX:

@article{IJIRSTV4I4005,
     title={Effects of Working Capital Management Practices on Profitability of Construction Firms Listed in Nairobi Securities Exchange, Kenya},
     author={Patrick Wanjala Mbakara},
     journal={International Journal for Innovative Research in Science & Technology},
     volume={4},
     number={4},
     pages={20--26},
     year={},
     url={http://www.ijirst.org/articles/IJIRSTV4I4005.pdf},
     publisher={IJIRST (International Journal for Innovative Research in Science & Technology)},
}

The construction industry in Kenya is a major Gross Domestic Product contributor as well as a key pillar in the creation of employment. Due to increased demand for improved road networks, dams, civil infrastructure, residential and commercial establishments, the industry has experienced exponential growth over the last few years. The Kenyan government had registered and licensed at least 300 construction firms by the end of 2014(Kenya National Bureau of Statistics 2014). With subsequent growing competition among the firms, it is important for the companies to ensure financial gains. The purpose of this study was to determine the effects of working capital management on the profitability of the construction firms. It was be guided by the following objectives: to assess the degree to which cash management practices influence profitability of construction companies at Nairobi Securities Exchange, to analyze the degree to which accounts payable practices influence profitability of construction firms at Nairobi Securities Exchange, to measure the degree to which accounts receivable practices impact the profitability of construction companies listed on Nairobi Securities Exchange, and to determine the degree to which Inventory management influence profitability of construction companies listed on Nairobi Securities Exchange .Descriptive and correlational research designs were used in the research process. Since only five firms comprised the population, census sampling technique was used that involved all the population in the research study. The research tools were record survey sheet and questionnaire. Data obtained was analyzed using trend analysis charts, cross sectional data analysis techniques and regression analysis. The results obtained indicated that only the cash management practices had a significant effect on profitability while the accounts payable, accounts receivable, and inventory did not have a significant impact based on regression analysis conducted. However, this study was not able to exhaust all working capital management components that have effects on profitability in construction firms. Therefore, effects of prepayments, accrued expenses, government regulations and policy, economic environment and culture on the profitability of construction firms need be established in future studies.

Construction Industry in Kenya, Effects of Working Capital Management Practices