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The operational efficiency aspect for any type of business is vital and must be \nconsidered by managements in order to earn healthy and sustainable financial \nperformance. Operational efficiency is the proficiency of a corporation to curtail the \nunwelcome and maximize resource capabilities so as to deliver quality products and \nservices to customers. Kenya has experienced significant transformations since the \ninception of Nairobi Securities exchange, in terms of growth due to local and foreign \ndirect investment such that it has emerged fourth in sub-Saharan Africa and one of the \nmost active securities market in the whole of |Africa. Besides the solid profitability \nthe market has brought to the various listed firms, it has also contributed to the \nstability of the financial market and economic development of Kenya in general. As a \nresult, the study of financial performance determinants, specifically operational \nefficiency has provoked academic research, corporation‟s management, financial \nmarket and regulatory interests (Athanasoglou, Brissimis & Delis, 2008). The \nobjective of this study was to examine the relationship between operational efficiency \nand the financial performance of firms listed at the Nairobi securities exchange. The \nstudy also used other five control variables which are: Financial leverage, Liquidity, \nSize of the firms, capital adequacy and real interest rates to also test whether they \nhave a relationship with ROA of firms listed at the NSE. This study covered a five \nyear period from 2009 to 2013. Descriptive research design was used and secondary \ndata was collected from World Bank and the annual reports of firms listed at the NSE. \nData was then analyzed using a regression analysis model and statistical softwares \nnamely: SPSS version 21 and Microsoft Excel 2010. The results of analysis were then \ninterpreted using tables. The findings showed that operational efficiency positively \nimpacts on the ROA of the firms listed at NSE. The effect of operational efficiency on \nROA is statistically significant at 5% level. The study therefore concludes that \noperational efficiency has a statistically significant relationship with ROA. The study \nalso found that financial leverage positively affects ROA of firms listed at NSE \nhowever effect is not statistically significant. Liquidity positively affects ROA of the \nfirms listed at NSE though the effect is not significant. Size of the firms listed at NSE \nnegatively impacts on ROA and the effect is statistically significant. Both capital \nadequacy and real interest rates positively impacts on the return on assets of firms. \nHowever, the effect is not statistically significant. The study recommended that the \nmanagers of firms should avoid losses through forecasting the level of financial \nperformance using fluctuations in the internal and external factors like operational \nefficiency, size of the firm, capital adequacy and interest rates, which affect Return on \nassets.
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