Implications of Trade Receivables Management of the Liquidity of Zimbabwe Stock Exchange listed Retail Companies.
The research study assesses the implications of trade receivable management on the liquidity of Zimbabwe Stock Exchange listed retail firms. The study looked into trade receivables proportions to total current assets of the firms, trade receivable constituted above 50% of current assets which was the basis of statement of the problem. This research involved the only two companies that extended credit to their customer namely Edgars Stores Limited and Truworths Limited. To achieve the main objective which was to determine the implications of trade receivable management on liquidity, the annual reports from 2009 to 2016 were used to sources of data. Receivable’s collection period and payable’s payment period was calculated from the data collected. The Debtor’s collection represented trade receivables management and Creditor’s Payment Period represented liquidity. These ratios were subjected to statistical analysis using linear regression model to test the hypothesis. The null hypothesis indicated that there is no relationship between trade receivables management and liquidity and alternative indicated that there is a relationship between trade receivables management and liquidity. CPP indicates the liquidity position of an organisation, which is its capacity to pay short-term debts when they fall due. If trade receivables do not pay debts due, the firm will not have funds to settle its own payables. The researcher recommends that retail firms review credit policies on a yearly basis in order to minimize liquidity problems as trends on the behavior of customers and competition will be learnt and adjustments to the policy made accordingly.