Browsing by Author "Kithandi, Charles Katua"

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    Financial Leverage and Financial Performance of the Energy and Petroleum Sector Companies Listed in the Nairobi Securities Exchange
    (Kenyatta University, 2019-04) Kithandi, Charles Katua
    The main objective of a firm is maximization of shareholders wealth. In attempt to achieve this objective the shareholders appoint management board to oversee the firm’s operations. The management board then utilizes the firm’s capital components of debt and equity at their disposal to achieve this objective. The puzzle of financial managers is the optimal capital structure mix of debt and equity that will ensure the main objective of maximization of shareholders wealth is achieved. One of the key indicators of a firm that is achieving this objective is improved financial performance. In attempt to improve the financial performance of a firm the financial managers may have to increase the company’s debt component. This use of debt by a firm to finance and increase its operation to improve financial performance of the firm is referred to as financial leverage. This means that financial leverage is a form borrowing (debt) or a loan that is given to a firm to finance its operations. The proceeds of debt/borrowings are usually reinvested to earn a greater return as compared to the cost of debt financing/interest. This research was directed towards assisting the financial managers in determining whether financial leverage affects financial performance. Financial leverage measurement includes use of debt ratio, debt-equity ratio and interest coverage ratio which are vital since they directly affect the financial performance of firms. This study was anchored on the following research objectives; to establish the effect of debt ratio, debt -equity ratio and interest coverage ratio on financial performance of energy and petroleum sector companies listed in the Nairobi Securities Exchange. The study was anchored on the following theories; Modigliani-Miller theorem, the Pecking Order Theorem and the Trade-off Theorem. The study utilized census since the population size is small. All the five companies from the energy and petroleum sector listed in the Nairobi Securities Exchange. were studied. Energy and petroleum sector is a key sector and player in industrialization of any nation and a key support sector of all other sectors in any economy. The study utilized secondary data that was mainly collected from the published financial statements of these companies. Explanatory research design was used. Quantitative secondary data was collected and analyzed using statistical package for the social sciences. This data was also represented using measures of central tendency such as mean, frequencies, percentages and measures of dispersion such as standard deviation. The study ran a multiple regression equation to determine the relationship between the variables in the study and to estimate the models for the study. Descriptive statistics was used to analyze data. In order to draw a conclusion and make recommendations, the analyzed data was further presented in tables, charts and graphs. On the effect of debt ratio on return on assets the study indicated that as the debt ratio increased the return on assets decreased. On the effect of debt equity ratio on return on return on assets the study indicated that as debt equity ratio increased the return on assets decreased. In summary the results indicated that there is a negative relationship between financial leverage and financial performance of petroleum and energy sector firms listed in the Nairobi Securities Exchange.
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    Risk Management Practices and Financial Performance of Commercial Banks in Kenya
    (International Journal of Scientific and Research Publications, 2024-12) Kithandi, Charles Katua; Kithandi, Dennis Katisya
    In the contemporary world risk management and financial performance in financial institutions especially commercial banks has gained momentum. Using KCB, this study investigated the effects of risk management techniques on the financial performance of commercial banks. The study was informed by network theory, expectation theory, and enterprise risk management theory. The study employed descriptive research design. The study's population consisted of 460 management personnel from KCB Headquarters and its Nairobi County branches. The target group consisted of 46 middle and upper-level managers from KCB in Nairobi County. Since the study's target population was so small, a census technique was employed. The study employed a semi structured questionnaire to collect data. The data collection tool's validity and reliability were assessed. Both descriptive and inferential statistics were computed using SPSS Version 27.0. The moral implications were considered. The results showed a strong positive relationship between organizational effectiveness and risk transfer. Furthermore, it was shown that risk avoidance contributed very little to the success of the company. Nevertheless, it was found that risk control had very little negative effect on the functioning of the company. Furthermore, it was discovered that risk retention considerably increased organizational performance. Lastly, government regulations had no impact because the association between the predictors and response variable remained same. The report recommended that KCB should put in place robust risk transfer and retention policies in order to enhance organizational financial performance. In order to safeguard banks from risks related to the banking sector, the report also recommended that the Central Bank of Kenya offer policy interventions in the form of strategic risk management technique.