Effect of Average Account Receivables on Profitability of Private Security Firms in Kisumu County, Kenya
Year: 2025
Type: article
Abstract: In today's dynamic business environment, efficient working capital management is a critical factor in sustaining and enhancing profitability, managing risk, and maximizing firm value. While companies strive to align their strategies with growth objectives and annual profitability, inadequate liquidity can hinder their ability to generate returns for shareholders. Therefore, adopting effective working capital management practices is essential. Despite the significance of working capital management, there is a gap in understanding its impact on the profitability of private security firms in emerging economies like Kenya. This study aimed to examine the effect of working capital management on the profitability of private security firms in Kisumu County, Kenya, for the period 2019–2023. Specifically, it assessed the impact of the average accounts receivable period on profitability. A correlational research design was employed, focusing on private security firms registered with the Private Security Regulatory Authority in Kisumu County. The study relied on secondary data obtained from financial statements, using Return on Assets (ROA) as a measure of profitability. The results indicated that the average accounts receivable period had a statistically significant positive effect on profitability (β1 = 2.012, t = 3.181, p = 0.04 < 0.05). These findings are valuable to private security firm managers, scholars, and policymakers, including government entities, as they provide insights into the role of working capital management in enhancing financial performance. JEL: G31, L84, M41 Article visualizations:
Authors: Jackline Nyawira Mwangi, Ondiwa Simon Oluoch
Institution: Maseno University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4410878207