INFLUENCE OF LIQUIDITY ON THE FINANCIAL PERFORMANCE OF AGRICULTURAL FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE
DOI:
https://doi.org/10.47672/ajf.141Keywords:
Liquidity, Financial performance financial performance analysis, listed Companies.Abstract
Purpose: The purpose of this study was to establish the influence of liquidity on the financial performance of agricultural firms listed at the Nairobi Securities Exchange.
Methodology: The research design adopted was descriptive and causal (explanatory). A census approach was adopted and all the seven listed agricultural companies were taken as the population. The respondents' sample was from finance departments at all levels and 220 questionnaires were administered. Primary data was collected using questionnaires while the secondary data was collected using data collection sheets from the firms as well as from the Nairobi Securities Exchange and CMA records. The particular inferential statistic was regression and correlation analysis. Panel data methodology was employed using a multivariate regression model to test the hypotheses and link the variables
Results: The study found out that liquidity has a positive influence on return on assets (ROA). In addition, the findings revealed that liquidity has a positive influence on return on equity (ROE). Further the results indicated that liquidity has a positive influence on earnings per share (EPS). The influence of liquidity on EPS is not statistically significant
Unique contribution to theory, practice and policy: The study recommends that financial managers should ensure that there is no mismatch between the current assets and current liability. If this happens, the mismatch will affect the firm's profitability.
Downloads
References
Abeysekera, I., & Guthrie, J. (2005). An empirical investigation of annual reporting trends of intellectual capital in Sri Lanka. Critical Perspectives on accounting, 16(3), 151-163.
Abubakar, S. (2010). Regulation and the economics of corporate financial reporting in Nigeria. Journal of Management and Enterprises Development, 7 (2), 65 - 72.
Afolabi, L. (1993). Monetary economics. Ibadan: Heinemann Educational Book [Nigeria] Plc.
Akpan, I. (2004). Fundamentals of Finance. 2nd Edition. Uyo:Nigeria. KIV Publishers.
Amadi, S. N. & Akani, W. H. (2005). Interest rate and private domestic investment in Nigeria (1993-2004). Niger Delta University Press.
Andabai, P. W. (2007). Dynamics of interest rate management and its impact on money supply in Africa: A theoretical approach. The University Advanced Research Journal, 1(3), 1-7
Andabai, P. W. (2010). Dynamics of interest rate management and its impact on money supply in Africa: A theoretical approach. The University Advanced Research Journal, Issue 3, Jan-March, PP. 1-7
Ankintoye, I.R. (2000). Investment decision: Concepts, analysis management. Lagos: Unique Educational Publishers.
Anyanwu J.C. (1993). Monetary economics. Theory, policy and institution. Hybrid Professional Series I.
Baumol, W.J. (1957). The transactions demands for cash: an inventory theorist approach. Quarterly Journal of Economics, 65(4).
Eljelly, M.A. (2004). Liquidity - profitability tradeoff: An empirical investigation in an emerging market, International Journal of Commerce and Management, 14 (2), 48 - 61
Farooque, O.A., van Zijl, T., Dunstan, K. & Karim, W. (2007). Ownership structure and corporate performance: Evidence from Bangladesh. Asia pacific journal of accounting & economics, 14(2), 127-150.
Gao, Y. (2010). Study on Formative Mechanism of Financial Risk and Control for Agriculture Listed Companies in China, College of Economy and Management, Southwest University, Beibei, Chongqing, China.
Gbosi, A. N. (2005). Money, monetary policy and the economy. Abiyah Associates Ltd.
Government of Kenya (2011). Medium-Term Expenditure Framework 2011/12 - 2013/14, Report for the Agriculture and Rural Development Sector. Nairobi, KE: Government Printers.
Hao, X. (2011). An Analysis of Firms Performance Evaluation of Agricultural Listed Firms Based on Factor Analysis, Economic Research Guide, 35, 124-125.
IMO (International Mathematical Olympiad) (2002). The 43rd International Mathematical Olympiad: A Reflective Report on International Financial Reporting Standards. (2006). An AICPA Backgrounder. New York, NY: AICPA.
Jhingan, M. L. (2004). Advanced Economic Theory (Micro & Macroeconomics). 12th Ed. New Delhi, India: Vrinda Publications (P) Ltd.
Keynes, J. M. (1936). The general theory of employment, interest and money. Interest and money. New York, NY: Harcourt Brace and World.
Mwangi, L. W. & Makau, M. S. & Kosimbei, G. (2014). Influences of Working Capital Management on Performance of Non-Financial Companies Listed In NSE, Kenya. European Journal of Business and Management, 6, (11), 195.
Nyoro J.K, Wanjala, M. & Awour, T. (2012). Increasing Kenya's Agricultural Competitiveness: Farm Level Issues. In print
Nzotta, S.M. (2014). Money, banking and finance: Theory and practice. Revised Edition. Owerri: Husdon-Judge Publication.
Ogiriki, T. & Andabai, P. W. (2014). Liquidity Preference Theory: A Comparison of William Baumol's and James Tobin's Propositions. African Research Review. An International Multidisciplinary Journal, Ethiopia Vol. 8(4), Serial No. 35, September, 2014:143-152 ISSN 1994-9057 (Print) ISSN 2070--0083 (Online) DOI: http://dx.doi.org/10.4314/afrrev.v8i4.12.
Ogwuma, P.A. (2008). The control of the monetary and banking system. The CBN Bulletin. 20(2).
Okpara, G. (2010). The cost of Capital Corporation and the theory of investment. American Economic Review, 32 (14).
Omboi, B.M. (2011). Reasons for Low Listing by Agricultural Companies in the Bourse: A Case Study of DelMonte Limited Kenya. Research Journal of Finance and Accounting, 2(3), 57-60
Omondi, M. M., & Muturi, W. (2013) Factors Affecting the Financial Performance of Listed Companies at the Nairobi Securities Exchange in Kenya Research Journal of Finance and Accounting, 4(15). Operations Management, 12, 297-310.
Orsota, F.O. (2004). Interest rate behavoiur under a programme of financial reform: the Nigeria Case. Economic and Financial Review, CBN Lagos, 30(2).
Parker, L. D. (2007). Financial and Eternal Reporting Research: The Broadening Corporate Governance Challenge. Accounting and Business Research, 37(1), 39-54.
Peng Yi (2006). Study on the Operating Performance of the Agricultural Listed Companies in China - Based on the Background of Transformation Economic, Zhengjiang University.
Ross, S.A. (2000). The Economic Theory of Agency: The Principal's Problem. The American Economic Review.
Tobin, J., (1966). Liquidity Preference as Behavior toward Risk. The Review of Economic
Uchendu, O. A. (2011). Interest Rate Policy, Savings and Investment in Nigeria. Economic and Financial Review, 31(1).
Wambua, P. (2013). Influences of agency costs on financial performance of companies listed at the Nairobi Securities Exchange. International Journal of Social Sciences and Entrepreneurship, 1 (5), 587-607.
Wang, P. (2008). How to Evaluate Performance of Government Agency: A manual for Practitioners. World Bank.
Wu J., Li, Y. & Zhu, M. (2010). Empirical Analysis of Rural Influencing Factors on Listed Agribusiness Financial Performance, Agricultural Economics and Management, 3, 22-27.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2017 American Journal of Financ
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
