Abstract: The companies within construction and allied sector listed at Nairobi Securities Exchange are crucial to Kenya's economy, contributing to job creation and infrastructure. However, they face declining profitability, with statistical data showing revenue drops for many firms’ financial year. Overall, profitability has decreased, with average margins falling significantly. Additionally, market capitalization has dropped for the last few years, raising investor concerns. In addition, many of these firms are grappling with elevated debt levels. Therefore, this study investigated the effect of inventories on profitability of construction and allied companies listed at Nairobi Securities Exchange, Kenya. The study employed casual research design. A time series model was applied. The 5 companies operating within this sector formed the unit of analysis whereby their profitability was analysed for a period ranging from 2021 to 2025. The collection of data was done using secondary data collection sheet. The analysis of the data was subjected to descriptive analysis using minimum and maximum values, mean and standard deviation. The relationship amongst variables was achieved by using inferential statistical analysis including correlation and regression analyses methods. The diagnostics tests done included; normality test, multicollinearity test and heteroscedasticity test and linearity test. The inventories of these companies were found to be statistically and significantly related with their profitability. The study concludes that proper management of inventories leads to streamlined operations and enhanced general financial strength of construction companies. The study recommends that the companies should embrace technology that can be used in improving the management of inventories through digital tools and software that can streamline the monitoring of materials and equipment.
Keywords: Inventories, Working Capital Management, Profitability.
Title: EFFECT OF INVENTORIES ON PROFITABILITY OF CONSTRUCTION AND ALLIED COMPANIES REGISTERED UNDER NAIROBI SECURITIES EXCHANGE, KENYA
Author: Rumana Dahir Adan, Dr. Moses Odhiambo Aluoch
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
Vol. 14, Issue 2, April 2026 - June 2026
Page No: 140-146
Research Publish Journals
Website: www.researchpublish.com
Published Date: 07-May-2026
