Liquidity and Financial Performance of Construction and Allied Firms Listed at the Nairobi Securities Exchange in Kenya
DOI:
https://doi.org/10.47604/ijfa.3747Keywords:
Liquidity, Financial Performance, Construction and Allied Firms, Nairobi Securities Exchange, KenyaAbstract
Purpose: A company's financial performance reflects its efficient combination of policies, operations, and characteristics to achieve a competitive advantage, and also shows how much of a company's income it pays out to investors. The general objective was to examine the effect of liquidity on the financial performance of construction and allied firms listed at the NSE, Kenya. The study was anchored on liquidity preference theory.
Methodology: The population of the study was the 5 construction and allied firms listed at the NSE in Kenya as of December 2025, and the study was conducted through a census. Secondary data for a year between 2016 and 2025 was utilized to collect financial information from the firm’s annual reports and financial statements for analysis with the aid of a secondary data collection sheet. Data were obtained from financial and statistical reports released by the NSE and the CMA. Data was analysed using descriptive and inferential statistics. The descriptive statistical tools included frequencies, percentages, means, variances, and standard deviations. Inferential statistical tools included Pearson’s product-moment correlation and regression analysis.
Findings: The findings revealed that liquidity had a positive and significant effect (β = 0.1824, p = 0.002) on construction and allied firms listed at the NSE, Kenya. Based on these findings, the study concluded that liquidity accounts for 54.8% of the variation in financial performance and thus plays a significant role in influencing the financial performance of construction and allied firms listed at the NSE, Kenya.
Unique Contribution to Theory, Practice and Policy: The study recommends that firms should strengthen liquidity management practices, adopt prudent debt management strategies, pursue sustainable growth strategies, and maintain adequate capital reserves to enhance financial performance.
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Copyright (c) 2026 Mayaka, M.M., Kimani E. M, Nduruhu, D.K.
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