Abstract: A positive cash flow situation gives a business more liquidity, which enables it to continue operating and generate greater revenue. Total debt describes how a corporation finances its assets through a combination of equity and debt, where the debt’s structure might include both short- and long-term debt. The research investigated the effect of free cash flow on total debt of companies listed on Nairobi Securities Exchange. The study was anchored on free cash flow theory and trade off theory. The study applied descriptive research design and secondary data was obtained from the firms from 2007-2011. Panel regression analysis was applied and fixed effect model was used. The result showed a positive and significant relationship between free cash flow and total debt of firms. The study recommends that firm management should manage and maintain appropriate level of cash flow in order not to increase total debt of companies, which can lead to decrease in performance.
Keywords: Free Cash Flow, Free Cash Flow Theory, Total Debt, Trade off Theory.
Title: EFFECT OF FREE CASH FLOW ON TOTAL DEBT OF FIRMS QUOTED ON NAIROBI SECURITIES EXCHANGE, KENYA
Author: Oliver Mukweyi Pyoko
International Journal of Interdisciplinary Research and Innovations
ISSN 2348-1218 (print), ISSN 2348-1226 (online)
Vol. 11, Issue 3, July 2023 - September 2023
Page No: 41-45
Research Publish Journals
Website: www.researchpublish.com
Published Date: 19-September-2023
