Effect of Liquidity Management Practices on Profitability of Manufacturing Industry in Kenya

Kung’u, James N.

doi:10.9790/5933-0801038489

Cited by 15 publications

(23 citation statements)

References 3 publications

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“…The finding though insignificant, agreed with the study's estimation that β 2 > 0. The finding did not agree with Isik (2017), Kung'u (2017, Saripalle (2018), Mohd and Asif (2018), and A. Mehmet and Mehmet (2018), whose studies uncovered liquidity as a significant determinant of firms' profitability.…”

Section: Model Estimationmentioning

confidence: 79%

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Liquidity and Firms’ Financial Performance Nexus: Panel Evidence From Non-Financial Firms Listed on the Ghana Stock Exchange

Musah

Kong

et al. 2020

SAGE Open

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The aim of this research was to establish the nexus between liquidity and the viability of quoted non-financial establishments in Ghana. Panel data deduced from the published annual reports of 15 entities for the period 2008 to 2017 was employed for the study. Preliminarily, cross-sectional reliance, unit root, serial correlation, heteroscedasticity, co-integration, and causality tests were respectively performed. Our findings established that there exists no cross-sectional reliance, and input variables are stationary and co-integrated with no presence of heteroscedasticity and serial correlation. Estimates from the random effects generalized least squares (GLS) regression showed that liquidity has significant adverse effect on the firms’ Return on Equity (ROE) but had insignificantly positive effect on ROE when surrogated by the cash flow ratio. Finally, test based on causalities uncovered that, with the exception of Current Ratio and ROE that are flanked by bidirectional liaison, no other causal affiliation was evidenced amid other variables. Policy recommendations are further discussed.

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Section: Model Estimationmentioning

confidence: 79%

“…From the study's regression estimates, liquidity was a significantly positive predictor of the firms' ROA. Kung'u (2017) studied liquidity and the viability of manufacturing entities in Kenya. From the study's correlational analysis, liquidity had a significantly favorable interaction with the firms' viability.…”

Section: Review Of Related Literaturementioning

confidence: 99%

Liquidity and Firms’ Financial Performance Nexus: Panel Evidence From Non-Financial Firms Listed on the Ghana Stock Exchange

Musah

Kong

et al. 2020

SAGE Open

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“…When it comes to the choice for the selection of the relevant indicator of the given categories, it should be noted that it Levin and Travis (1987) pointed out to analyse ROCA instead of ROA and ROE as being deformed by shareholders' decisions to lease company's assets, while an indicator of liquidity to use working capital sufficiency, cash conversion cycle, and current or acid-test liquidity ratio. The quick ratio behaviour and impact on profitability was investigated by Ahmad (2016), Irawan and Faturohman (2015), Khidmat and Rehman (2014) and Kung'u (2017).…”

Section: Literature Reviewmentioning

confidence: 99%

Analysis of the impact of liquidity on the profitability in the medium and large meat processing enterprises in the Republic of Serbia

Čavlin

Vapa-Tankosić²,

Miletić³

et al. 2021

Ekonomika poljoprivrede

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Liquidity and profitability are closely related economic categories. The issue of constant balancing between liquidity and profitability, in theory known as "liquidity-profitability trade off", has been the subject of significant interest of the scientific community. There is no consensus on the direction of the impact of liquidity on profitability, but the existence of this impact in practice is confirmed. The aim of this paper is to investigate the impact of liquidity on profitability, based on selected traditional financial indicators, for medium and large enterprises in the group of processing and preserving of meat and meat products of the Republic of Serbia, in the period 2016 to 2019. The findings of a multiple linear regression analysis, show that the ratio of long-term sources and fixed assets in the group of processing and preserving of meat and meat products makes a statistically significant contribution predicting the return on assets.

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“…Many studies connect -theoretically and empirically -the influence of liquidity on profitability. Therefore, different authors propose the idea of liquidity having a positive influence on profitability (Vieira 2010;Mihajlov 2014;Mushtaq et al 2015;Kung'u 2017). Apart from the influence of liquidity on profitability, authors also investigate the relationship between liquidity and leverage.…”

Section: Literature Reviewmentioning

confidence: 99%

Liquidity risk management: practice among Croatian firms

Karanović

Gnjidić

2018

Zb. Veleuč. Rij. (Online)

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The main purpose of this paper is to explore the practice of liquidity risk management of Croatian business entities. The analysis is based on a survey of 62 business entities in Croatia. The authors investigate the existence of risk management and liquidity risk management measures among the surveyed business entities. The respondents’ knowledge of management, their use of indicators and methods for the management of liquidity risk, in addition to the cited reasons for implementation of liquidity risk measures were also subject to examination. Furthermore, the authors investigate the importance of liquidity management in business. The analysis reveals that Croatian business entities have neither sufficient knowledge regarding the majority of financial indicators, nor they tend to use liquidity management plans. Consequently, the survey’s findings indicate that the overall level of financial knowledge of Croatian managers is inadequate. This can, thus, be identified as one of the reasons for the traditionally high number of illiquid business entities in the market. Finally, this paper provides academia and policymakers with new revelations concerning the management of liquidity risk among business entities in Croatia.

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Effect of Liquidity Management Practices on Profitability of Manufacturing Industry in Kenya

Cited by 15 publications

References 3 publications

Liquidity and Firms’ Financial Performance Nexus: Panel Evidence From Non-Financial Firms Listed on the Ghana Stock Exchange

Liquidity and Firms’ Financial Performance Nexus: Panel Evidence From Non-Financial Firms Listed on the Ghana Stock Exchange

Analysis of the impact of liquidity on the profitability in the medium and large meat processing enterprises in the Republic of Serbia

Liquidity risk management: practice among Croatian firms

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