Department of Business and Economics

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Effects of Credit Policy on Profitability of Manufacturing Firms in Kenya
(IOSR Journal of Economics and Finance (IOSR-JEF), 2014-01) Kungu, James, N.; Wanjau, Kenneth Lawrence; Waititu, Antony, G.; Gekara, Geoffrey M.
This paper considered the effects of credit policy on profitability of manufacturing firms in Kenya. The study looked at the elements that constitute the credit policy; credit terms, collection efforts, credit period and credit standards. A descriptive research design was used to collect the data from the field and a stratified random sampling technique was used to come up with a sample of 81 manufacturing firms. A questionnaire was used to collect data from 81 manufacturing firms in Nairobi industrial area and its environs in Kenya. However, only 71 questionnaires were returned. The chief finance officers of the manufacturing firms were requested to fill in the questionnaire. Both descriptive and inferential analyses were done. Analysis of Variance (ANOVA) and regression analysis were used to test the hypothesis. The results show that there is a positive relationship between profitability and credit policy in the manufacturing firms in Kenya (0.304). Credit policy explains only 9.2% of the profitability in the manufacturing firms in Kenya. 90.8% of the variation in profitability is explained by other factors. The findings of the study revealed that the way credit policy is designed impacts on the profitability of manufacturing firms. Therefore, we recommend that the finance managers of manufacturing firms regularly review the credit policy of their firms to ensure that they are ideal and result in increased profitability.
Influence of Aggressiveness and Conservativeness in Investing and Financing Policies on Performance of Industrial Firms in Kenya
(IOSR Journal of Economics and Finance (IOSR-JEF), 2014-01) Kungu, J.N.; Wanjau, Kenneth Lawrence; Waititu, Antony, G.; Gekara, Geoffrey M.
Working capital level determines whether a firm is aggressive or conservative in its operations. Aggressiveness in application of working capital management brings about improved financial performance but at the same time increases the level of risk. The paper looks at the influence of working level on performance in the industrial firms in Kenya.A sample was determined through stratified sampling method in order to include all different types of industries in Kenya. A questionnaire was used to collect data from chief Finance Officers of industrial firms in Kenya. Both descriptive and inferential analyses were done. Analysis of Variance (ANOVA) and regression analysis were used to test the hypothesis. The results show that there is a positive relationship between performance and working capital levels inindustrial firms in Kenya (0.544). Working Capital Levels explain 29.6% of the performance in the industrial firms in Kenya. 60.4% of the variation in performance is explained by other factors. The findings of the study revealed that the finance managers are cautious in the use of working capital items. They apply moderate financing and investment strategies.Therefore, we recommend the finance managers to be trained on issues of better utilization of working capital items for improved performance.