Assessment of the effects of management of accounts receivables on firms profitability in kenya. A case of small and medium enterprises in narok county

Abstract

ABSTRACT Receivable management is an important fact of financial management. Their accuracy monitoring and proper management are also important dimensions in organization. This study will assess the effects of management of accounts receivable on profitability of SMEs in Narok County. A total of 76 firms located in the county were involved in the study. The independent variables of the study were cash conversion cycle, accounts receivable turnover and accounts receivable payment period. The dependent variable of the study was profitability measured in return on assets of the firms. The study used frequencies, mean standard deviation and skewness to analyze data collected. A simple random sampling method was then used to select the specific respondents for the study. Data was analyzed for descriptive and inferential statistics. Descriptive statistics such as tables, charts and percentages analysis were used for presentation of data. The study concluded that firms should maintain short cash conversion cycle and reduce payment period of accounts receivable. It was also concluded that analyzing cash conversion cycle is a challenge to SMEs thus the relevant stake holders should take the initiative to ensure that SMEs are educated on good business management practices.