Financial Management and Financial Performance of Firms Listed under Manufacturing and Allied Sector at the Nairobi Securities Exchange, Kenya
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Date
2017
Authors
Bulle, Hassan Issack
Omagwa, Job
Journal Title
Journal ISSN
Volume Title
Publisher
Globeedu Group
Abstract
The success of any organization depends on sound financial management, some of the major financial management
practices that determines the success or failure of an organization are include: the level of working capital investment,
Investment decisions, and the financing decisions. However, the effect of these variables on financial performance of
manufacturing firms listed at the Kenyan stock market was largely unclear hence the basis of this study. This study
sought to achieve the following specific objectives: To determine the effects of working capital investment, capital
structure and capital investment on financial performance of firms listed under the manufacturing and allied sector at
the Nairobi Securities Exchange, Kenya. Data was analyzed using descriptive analysis and panel regression analysis. The
target population of interest in this study constituted all companies listed under manufacturing and allied at the NSE for
the period of five years from 2011 to 2016. The study used both primary and secondary data. The study found that
working capital, capital structure and capital investment singly have a positive and significant effect on the financial
performance of the firms studied. The study concluded that working capital is important to the financial performance of
manufacturing and allied sector at NSE because the current assets of a typical manufacturing firm accounts for over half
of its total assets. In view of capital structure, the study concluded that a well-balanced capital structure provides an
organized way for the firms in the manufacturing and allied sector to raise capital and also provides flexibility in raising
funds. The study concluded that through capital investment, firms in the manufacturing and allied sector at NSE invest to
acquire capital assets in order to generate benefits over a series of years in future and should pursue product
diversification investment strategies in order to broaden their revenue base.
Description
Research Article
Keywords
Working capital, Capital structure, Capital investment