Quick Ratio and Financial Performance of Agricultural Firms Listed at the Nairobi Securities Exchange, Kenya

Abstract

The study was informed by the continuous decline in financial performance of the Agricultural firms listed at the Nairobi Securities Exchange, Kenya. The study emanates from the Doctoral dissertation of the first author in which the co-authors served as supervisors. A census approach was adopted where secondary data from audited annual financial reports of all the six Agricultural firms listed at the Nairobi Securities exchange, Kenya was used, covering the period 2015 to 2022. Descriptive analysis and panel regression analysis were applied. Based on the outcome of the panel regression analysis, the study established that quick ratio has significant effect on financial performance of the Agricultural firms listed at the Nairobi Securities Exchange, Kenya. The study established that quick ratio has significant effect on financial performance of the Agricultural firms listed at the Nairobi Securities Exchange, Kenya. The study further recommends that holding of quick assets should be done with caution by firms. Holding of quick assets should be done in view of underlying short-term liabilities since excessive levels lead to declining financial performance. Keywords: Quick Ratio, Financial Performance, Trade-Off Theory and Dividend Signaling Theory