DOI: 10.36347/sjebm.2018.v05i11.002

Pages: 997-1002

The main aim of the study was to analyze effect of inventory and cash conversion cycles on financial performance in Kenya; A Case Study of Listed Firms in the Commercial and Services Segment of Nairobi Securities Exchange. The study adopted the following theories; Operating Cycle Theory and Cash Conversion Cycle Theory. The study adopted descriptive research design which tested variables the way they occur in natural environment without interfering with them. The target population of the study was the 12 firms in the Commercial and Services Segment of Nairobi Securities Exchange. The study collected secondary data from audited accounts reports covering 2007 to 2017. The study purposively took census of all the firms in the commercial and service segment of which did not require sampling procedure. The researcher had a challenge in the companies which did not disclose some components of working capital on their financial statements but had to visit their company’s premises to access the data. Data was analyzed using panel data regression models and correlation analysis with the help of Stata Statistical Software to establish the combined influence of the four components of working capital management on financial performance. The study found out that that Inventory Conversion Period had no correlation with financial performance, r=.509, p=.050 indicating that Inventory Conversion Period affected financial performance of firms’ in the commercial segment of the NSE, Cash Conversion Cycle had no significant relationship with financial performance, r=.001, p=.073>.05 indicating that Cash Conversion Cycle (CCC) did not affect financial performance of firms’ in the commercial segment of the NSE.