Debtors management and financial performance of sugar factories in Western Kenya

Weak Debtors management continues to haunt sugar factories with many experiencing financial scandals that have culminated to their collapse. Though existing studies shallowly focus on the term corporate governance, this study will critically examine debtor’s management on financial performance of sugar factories in Western Kenya. Therefore, inadequate evidence on the relationship between Debtors management and Sugar Factories Financial Performance necessitated this study. The study utilized Myopic Market Model. This study adopted descriptive survey research design and targeted 130 officers from sugar factories in Western Kenya. Sample size was calculated using Taro Yamane’s proportional sampling technique formula. Primary data was collected by means of self-administered questionnaires and analyzed using descriptive and inferential statistics using (SPSS) software. Tables were used to present results of the finding because they are easy to understand. Descriptive statistics was used using tables for easier reference. The study utilized inferential statistics using regression and correlation analyses to assess the strength of the relationship between debt Management and Financial Performance of sugar factories in Kenya. The study findings showed a positive high correlation between institutional share ratio and financial performance (R= 0.651 with profitability). This shows that debtor management positively contributes to financial performance of sugar factories in Western Kenya. The study recommends that sugar factories should adhere to credit terms and policies and enforce them strictly so as to improve their financial performance. It further recommends good corporate governance measures and principles should be looked into and enforced. The study concluded that debtor management influenced financial performance of Sugar factories in Western Kenya.