Accounts Payables Conversion Period on Liquidity of Equity Securities of Companies at Nairobi Securities Exchange

Abstract

Purpose: The purpose of the study was to determine the effect of Accounts Payables Conversion Period on Liquidity of equity securities of companies at the Nairobi Securities Exchange.

Methodology: This study adopted a descriptive survey research design since data involved was quantitative in nature and more so descriptive study focused on explaining situations. Population of the study included all 61 companies listed at Nairobi Securities Exchange at June 2016.This study embraced secondary panel data of 10 years since 2007. The data was subjected to required descriptive and inferential statistical tests with respect to the objectives of the firm; statistical analysis was done by use of E-views soft ware package.

Findings: The results indicated that Accounts Payables Conversion Period had a significant effect on Liquidity of equity securities at Nairobi Securities Exchange.

Implications: This study was therefore designed to address scholarly research gap of earlier researchers for having used only internal organization’s financial information on the examination of effect of Accounts Payables Conversion Period and traditional accounting liquidity within the organization as determined by use of accounting ratios, yet companies are listed at securities exchange markets, where investors require equity securities trading information of individual firms on liquidity before making investment decisions of providing funds. The essence of the study was to relate whether the organization’s internal financial performance results had an impact on external financial performance of the organizations at securities exchange markets as determined by liquidity of equity shares, more so with respect to firm size.

Key words: Liquidity, Accounts Payables Conversion Period, Firm Size