| dc.description.abstract | The main purpose of this study was to determine the effect of credit management
practices on the profitability of the formal manufacturing firms in Kenya. The
specific objectives of the study were formulated as follows: to investigate of the
effect of client appraisal on profitability of formal manufacturing firms in Kenya,
to establish the effect of credit risk control on profitability of formal manufacturing
firms in Kenya, to determine the effect of debt collection policy on profitability of
formal manufacturing firms in Kenya and to determine the effect of credit terms on
profitability of formal manufacturing firms in Kenya. The study was anchored on
the Credit Risk theory, Credit Scoring Theory and Credit Default Theories. The
study adopted the descriptive research design. The Target population for the study
was 1,008 registered formal manufacturing firms in Kenya, whereas the sample size
was 286 unit of analysis which were selected via the stratified random sampling
technique. The researcher used both primary secondary data. The primary data was
collected using questionnaires, whereas the secondary data was collected via data
collection sheets. The statistical package for social sciences version 20 was used in
analysing the collected data in this thesis. The regression coefficients generated
from the model were used in testing the hypothesis at .05 level of significance. The
p-value for H01 was .001, the P-value for H03 was .000 and the p-value for H04 was
.005. These outcomes informed the rejection of H01, H03 and H04. The rejection of H01,
H03 and H04 entailed that client appraisal, Debt collection policy, and credit terms
have a significant effect on the profitability of formal manufacturing firms in
Kenya. The p-value for H02 was .093, these outcomes led to the failure to reject the
second hypothesis. The failure to reject H02 indicated that credit risk control has no
significant effect on the profitability of formal manufacturing firms in Kenya. The
study therefore, concluded that the formal manufacturing firms in Kenya should
focus on investing in client appraisal, debt collection policy, and credit terms since
they significantly affect their performances. The outcomes from the study would
be helpful to managers in the manufacturing firms in making informed decisions
with reference to credit management. The study also enriched the literature in the
field of finance. The study recommends that policy formulating bodies and
regulatory bodies should devise policies which support formulation and
implementation of credit management practices, this is because they have an
overall positive effect on the performance of formal manufacturing firms in Kenya. | en_US |
