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

more »

... s 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. International Journal of Research Studies in Agricultural Sciences (IJRSAS) Page | 30 a direct positive relationship between Accounts Payable and Performance (Profitability & liquidity), proxied by GP %, NPM, ROE, current ratio and quick ratio. The study recommends that finance managers and financial officers of companies should establish a long-term relationship with their suppliers in order to access trade credit in a more easy and fast way, as increased use of trade credit enhances performance of companies through increased profitability. The priority of top management of every company should be to manage their trade credits prudently in order to remain profitable and competitive. It is therefore important know how and what working capital structure will influence their performance.