EFFECT OF AVERAGE ACCOUNT PAYABLES ON PROFITABILITY OF PRIVATE SECURITY FIRMS IN KISUMU COUNTY, KENYA

Abstract

In today's dynamic business environment, efficient account payable management is a critical factor in sustaining and enhancing profitability while mitigating risk and maximizing firm value. Although firms strive to align their strategies with growth objectives and annual profitability targets, inadequate liquidity can hinder their ability to generate returns for shareholders. Therefore, effective account payable management practices are essential. Despite the significance of this topic, there remains a gap in understanding the impact of account payable management on the profitability of private security firms, particularly in emerging economies like Kenya. This study examines the effect of account payable management on profitability of private security firms in Kisumu County, Kenya, from 2019 to 2023. Specifically, the study assesses the impact of average accounts payable on the profitability of these firms. A correlational research design was adopted, targeting private security firms registered with the Private Security Regulatory Authority in Kisumu County. The study relied on secondary data obtained from financial statements, with Return on Assets (ROA) serving as the profitability measure. Findings indicate that average accounts payable significantly influence the profitability of private security firms in Kisumu County (β =9.301, p=0.006). Results imply that account payable for private security firms in Kenya should be well managed for the firms to improve their profitability. These results provide valuable insights for private security firm managers, scholars, and policymakers, including government and stakeholders, in shaping financial management strategies.   JEL: G31, L84, M4