Accounts Payable Management and Financial Performance of Manufacturing Firms. A Case of Kazire Health Products Limited

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Accounts Payable Management and Financial Performance of Manufacturing Firms. A Case of Kazire Health Products Limited

 Nelson Nkwasibwe1*, Elly Atuhereze Katsigaire2, Bwesigye Tobias3
1PhD BA candidate, Department of Business and Management, Lecturer Ibanda University Department of Business and Management Studies, Nigeria
2Senior Lecturer Ibanda University, Nigeria
*Corresponding author
Received: 07 January 2023; Revised: 20 January 2023; Accepted: 01 February 2023; Published: 24 March 2023

Abstract: The study focused on establishing the relationship between accounts payable management and financial performance in Kazire Health Products Company Limited. It was based on the following objectives; to find out the accounts payable management strategies used by Kazire health products ltd, to assess the level of financial performance in Kazire health products Ltd and to establish the relationship between accounts payable management and financial performance of Kazire health products Ltd
The researcher used a cross sectional research design consisting of quantitative approaches of data collection and analysis. The study population consisted of the management and operational staff consisting of employees from administration, marketing department, accounts, Sales Department and customers of Kazire health products limited. A sample size of 66 respondents was used. Questionnaires were used to collect data. Data collected was analyzed using Statistical Package for Social Sciences (SPSS).
The study revealed that Kazire health products limited has an effective accounts payable Management Policy. It was further revealed that as much as the company is earning profits, her profitability levels in the past three years have been declining compared to the past years. The study findings established that there is a positive significant relationship between accounts payable management and financial performance of Kazire health products Ltd at r=0.872(**) with P-value = 0.000. Accounts payable is one of the major sources of unsecured short-term financing resulting from transactions in which merchandise is purchased.

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I. Introduction

1.1 Study Background.

Accounts payable is defined as the supplier whose payment for goods or services has been processed but are not yet been paid. Accounts payable includes trade credit and accrued expenses which together provide finance to the operations of a business on an on-going basis (Naeem et al., 2014). Firms would rather sell for cash than on credit, but competitive pressure forces most companies to offer credits. Accounts payable can be defined as customers who have not made payment for the goods supplied or service offered by the company. Accounts payable, the money that a company is obligated to pay out over the short term, it also a key component of working capital management. Accompany seeks to strike the balance between maintaining maximum cash flow by delaying payments as long as is reasonably possible and the need to maintain positive credit ratings and good relationships with suppliers and creditors Hassan, Mberia & Muturi (2017).
Financial performance is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. The term is also used as a general measure of a firm’s overall financial health over a given period of time and can be used to compare similar firms across the same industry or to compare industries or sectors in aggression (Nyabuti & Ondiek 2016). Financial performance is a subjective measure of a firm’s overall financial health over a given period of time and can be used to compare similar firms across the same industry According to Ganag, Kalaiselvan, and Suriya (2015) measures of financial performance include liquidity, solvency, profitability debt repayment capacity and financial efficiency of the firm. Financial performance can be measured by the rate of return on investment. The performance of a firm can be measured in several ways. Brigham and Gapenski (1999) indicate that the measures of profitability can include book value based or market value based. They contend that accounting ratios such as return on equity, return on sales and return on assets can be used to measure firm’s financial performance.