Abstract

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When firms are incorporated, equity capital is the most available source from the promoters. Equity financing consist of ordinary share capital, preference shares, and retained earnings. As business improves, additional capital may be required and debt option is usually the fastest given there are fewer regulatory barriers. In the recent years the performance of some companies listed at the NSE, has been dismal due to their high level of debt compared to equity. The objective of this research was to assess the effects of accounts payable on financial performance of publicly listed manufacturing companies at NSE, Kenya. Census sampling technique was used and the study used secondary data, which was obtained from the companies’ statistics and journals at the Nairobi Securities Exchange. SPSS was used to carry out the descriptive analysis of the variables, requisite analysis and advanced analysis of the data. A multiple regression model was used to test the relationship between the Accounts payable and firm performance. The results from this research suggested that in most of the manufacturing firms listed at the NSE, there was a direct positive relationship between Accounts Payable and the dependent variable, Profitability and Liquidity, supporting the Pecking Order Theory.

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