MJAMR

Payables/Creditors Management And It’s Impact On Financial Performance Of Ntake Manufacturing Industry

Ariyo Gracious Kazaara, Arinaitwe Julius


Abstract

The study aimed at payables/creditors management and its impact on financial performance of Ntake manufacturing industry. Primarily, financial statements for the past 5 years were thoroughly analyzed longitudinally where crucial metrics including operating cash flows, inventory holding periods, payables days, profitability ratios and asset utilization were carefully evaluated to discern trends and how fluctuations in payables impacted overall returns. Supplementary to this quantitative phase, in-depth one-on-one interviews were also conducted with top leadership, accounts personnel as well as major suppliers using semi-structured questionnaires to garner deeper insights into prevailing vendor payment policies, challenges experienced in disbursing payment obligations on time, credit terms negotiation strategies and opportunities for improvement. From the findings, the analysis found a strong positive correlation between creditors' management and financial performance, as indicated by the R value of 0.735. This suggests financial performance was heavily influenced by creditors' management practices. The R Square value was 0.718, demonstrating that 71.8% of the variation in financial performance can be explained by creditors' management. The adjusted R square of 0.615 accounted for the number of variables in the model, confirming creditors' management strongly predicts financial performance even after correcting for additional factors. The statistical analysis revealed a remarkably strong positive correlation between creditors' management practices and overall financial performance. Given over 70% of the variation in results could be attributed to creditors' management alone, it is imperative that the organization urgently prioritizes optimizing processes and controls pertaining to this important function. A comprehensive, multi-pronged revamp of the creditors' management framework should be undertaken, spearheaded by senior leadership and closely monitored through an internal audit program.

Keywords

payables/creditors management financial performance and Ntake manufacturing industry
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Ariyo Gracious Kazaara & Arinaitwe Julius (2024). Payables/Creditors Management And It’s Impact On Financial Performance Of Ntake Manufacturing Industry. Metropolitan Journal of Academic Multidisciplinary Research, 3(1). https://journals.miu.ac.ug/pages/article.php?article_id=1229