Assessing Accounts Receivables Management as a Determinant of Profitability on Agro-Firms in Eldoret Business Centre

Alice Likalama, Dr. Caroline Ayuma, Dr. Jared Bogonko

Agro-firms, Accounts Receivables, Eldoret business Centre and Profitability.

Most agro-firms in Eldoret business Centre have been operating without accounts receivables management as a component of working capital meaning it has been difficult to manage their working capital. The main objective of the study was to determine the effect of management of accounts receivables on firm’s profitability of agro-firms in Eldoret Business Centre.The study had target population of 510 respondents. Purposive sampling technique was used to sample 51 managers, while simple random was used to sample 214 other employees. Data was collected using a 5 point Likert scale structural questionnaire. To determine the validity of research instrument the researcher used experts opinion, the items in the questionnaires’ content, structure and sequence were appropriately amended to remove any ambiguities and pilot study was carried out. Reliability of proposed constructs was tested using Cronbach Alpha. The findings indicated that Management of accounts receivables had a coefficient of 0.716, and profitability had a Cronbach’s alpha coefficient of 0.781. The data was analysed using descriptive statistics that include frequency distribution tables, percentages and other measures of central tendency. From the study it was concluded that the postulated hypothesis was not supported. Indicating that management of accounts receivables p=0.001, is a predictor variable for profitability of agro firms. This study recommends that there is need for managers to create value for their shareholders by ensuring effective and efficient management of debtors. Owing to the limitations of the study it is suggested that same study be done but in other sectors to allow generalizations of the study findings.

10.22161/ijaers/310.25