Effect of cash flow management activities on financial performance of manufacturing companies in Nairobi

Table of Contents

CHAPTER ONE

1.1 Background of the Study

1.2 Statement of the Problem

1.3 Research objective

1.4 Research Questions

1.5 Justification of study

1.6 Scope of the study

CHAPTER TWO

2.1 Introduction

2.2 Theoretical Review

2.3 Empirical Review

2.4 Knowledge Gap

2.5 Conceptual framework

2.6 Operationalisation of Variables

CHAPTER THREE

3.1 Introduction

3.2 Research design

3.3 Target Population

3.4 Sampling and sampling procedure

3.5 Data Collection Instrument

3.6 Data collection procedure

3.7 Data Processing and analysis

3.8 Research Ethics

Research Objectives and Themes

The primary objective of this study is to analyze the influence of cash flow management activities on the financial performance of manufacturing companies based in Nairobi, specifically focusing on how operating, investing, and financing cash flows impact firm profitability and stability.

• The role of operating cash flow in maintaining liquidity and supporting daily business operations.
• The impact of investing activities on long-term growth and capital expenditure efficiency.
• The significance of financing cash flows, including debt management and equity capital, on corporate performance.
• Application of financial ratios (ROE and ROA) to measure the success of cash management strategies.
• Evaluation of existing theoretical models, such as the Cash Conversion Cycle and the Miller-Orr Model, within the context of the manufacturing sector.

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Summary of Chapters

CHAPTER ONE: Introduces the background of cash flow management in manufacturing, identifies the core problem of cash flow shortages, and outlines the research objectives and scope.

CHAPTER TWO: Provides a comprehensive theoretical and empirical review, analyzing key models like the Cash Conversion Cycle and Keynesian Theory in relation to cash flow management.

CHAPTER THREE: Details the research methodology, including the descriptive research design, sampling of 88 manufacturing firms, and data collection and analysis procedures using STATA.

Keywords

Cash flow activities, Financial performance, Return on Equity (ROE), Return on Asset (ROA), Manufacturing companies, Nairobi, Working capital, Cash conversion cycle, Liquidity, Debt management, Investing cash flow, Operating cash flow, Financing cash flow, Financial statements, Corporate profitability.

Frequently Asked Questions

What is the core focus of this research?

The research examines the relationship between cash flow management activities and the financial performance of manufacturing companies in Nairobi, Kenya.

What are the central themes of the study?

The study centers on the three main components of cash flow statements—operating, investing, and financing activities—and how they impact a firm's profitability and financial health.

What is the primary research goal?

The primary goal is to determine whether effective cash flow management significantly influences the financial performance of manufacturing firms, measured through Return on Equity (ROE) and Return on Assets (ROA).

Which scientific methodology is employed?

The study utilizes a descriptive research design, gathering secondary panel data from 88 sampled manufacturing firms over a five-year period (2011–2016), analyzed via STATA software using correlation and linear regression analysis.

What topics are covered in the main body?

The main body covers a theoretical review of cash management models, an empirical review of existing global and local studies, and a detailed research methodology section covering target population, sampling, and analytical tools.

What are the key terms associated with this work?

Key terms include Cash flow activities, Financial performance, Return on Equity (ROE), Return on Asset (ROA), Working capital, and liquidity management.

Why are the Cash Conversion Cycle and Miller-Orr Model relevant?

These models are relevant as they provide the theoretical framework for understanding optimal cash balances, liquidity, and the timing of cash inflows and outflows within manufacturing processes.

How is the sample for the study determined?

The sample size of 88 companies is determined using the Naasiuma (2000) Model, based on a target population of 735 registered manufacturing companies in Nairobi.