Author
Listed:
- Joseph Muthama Ndiku
(Jomo Kenyatta University of Agriculture and Technology, Kenya.)
- Willy Muturi
(Jomo Kenyatta University of Agriculture and Technology, Kenya.)
- Joshua Matanda Wepukhulu
(Jomo Kenyatta University of Agriculture and Technology, Kenya.)
- Richard Ngali
(Jomo Kenyatta University of Agriculture and Technology, Kenya.)
Abstract
The paper sought to assess the effect of debtors management as an aspect of working capital management on financial sustainability of non-financial firms listed in East Africa. Debtors management which was measured through the average debt collection period is an essential working capital management practice that ensures customers pay outstanding invoices early for a stable cashflow. The study comes amid declining financial sustainability among most of the listed firms, whereby despite the short-term profitability, most of the firms are unable to maintain a strong financial basis for long-term. The study was anchored on agency theory that upholds the essence of managers to uphold shareholders' interest in liquidity and long-term financial sustainability by not extending generous credit terms to increase sales and market share which are short-term gains. Through an explanatory correlational research design, the study targeted 47 non-financial listed firms in Kenya, Uganda, Rwanda and Tanzania. Secondary data was collected using a panel data collection sheet for a ten-year period ranging from 2014 to 2023. The data was analysed using Stata software via descriptive and inferential statistics. The study found significant variations in debtors management among East Africa's listed non-financial firms, with average collection periods ranging from a few days to over a year. On average, firms took more than three months to collect payments, exposing them to liquidity risks and potential bad debts. The analysis confirmed that efficient debtor management significantly enhances financial sustainability (R2 = 0.5208; β = 0.214; P-value = 0.0000<0.05). The study concludes that effective receivables' policies among the listed non-financial firms are critical for stable cash flows and recommends stricter credit controls, timely debt recovery strategies, and continuous monitoring to strengthen financial sustainability.
Suggested Citation
Download full text from publisher
To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below whether another version of this item is available online.
2. Check on the provider's
web page
whether it is in fact available.
3. Perform a
for a similarly titled item that would be
available.
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-05524682. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.
Printed from https://ideas.repec.org/p/hal/journl/hal-05524682.html