Nguyo, Stephen Mwangi2025-03-252025-03-252024-11https://ir-library.ku.ac.ke/handle/123456789/29845A Research Project Submitted to School of Business, Economics and Tourism in Partial Fulfillment of the Requirement for the Award of the Degree of Master of Business Administration (Finance) of Kenyatta University, November 2024. Supervisor Faith NkuruIn Kenya, legislative acts by parliament establish state corporations with the aim of promoting social and economic progress. The state corporations advisory committee has identified eight distinct categories of these entities, which include financial, commercial, and industrial, regulatory, public universities, training and research, service, regional development authorities, as well as tertiary education corporations. Out of the 33 state corporations in commercial and manufacturing category, 18 fall under manufacturing while 15 are commercial oriented and therefore by their operational nature expected to make profits or operating surplus. The study focused on the fifteen (15) profit-making state corporations. Most commercial state corporations are in a state of perennial loss making. Their financial performance trend between 2016-2020, shows that out of the 15 corporations in the commercial sector, only four (26.67%) are sustainable from their operations. This leaves over 73.33% of them struggling to survive and have to depend on government funding to address their liquidity challenges. The study's goals were to examine the effect to the commercial state firms in Kenya on their performance when it comes to budgetary control, corporate finance, and financial management choices. The investigation was based on the Signalling theory, Contingency theory, the Pecking Order theory, and Baumol's cash management model. The study assumed descriptive study design. The study used census procedure since all fifteen State Corporations under the commercial category were studied. The study targeted top management of these entities but utilized a sample scope of 75 participants from a populace of 90 individuals. Raw information was collected through surveys, and auxiliary measurements were made using information gathering forms based on publicly accessible financial reports. Statistics, both descriptive and inferential, were computed on numerical data. Descriptive techniques and statistical package for social sciences software assisted in evaluating secondary data. The significant influence of each predictor coefficient correlation was examined using a regression analysis. In addition, the study did diagnostic tests limited to heteroscedasticity test, normality tests, and multi-collinearity tests. The inferential statistics results indicate that working capital management, capital budgeting, investment decisions appraisal, and financial reporting and analysis have positiveandstatistically significant effect on financial performance of commercial SOEs. Working capital management, capital budgeting, investment decision appraisal, and financial reporting and analysis have apositive and statistically effect on financial performance of SOEs with p values of 0.001, 0.045, 0.038, 0.000 respectively. The research concludes that working capital management, capital budgeting, investment decision appraisal, and financial reporting and analysis have a positive statistical and significant effect on potential of commercial SOEs to perform economically. The study commends that SOEs management need to implement effective working capital management strategies to optimize current assets and liabilities utilization. Management also needs to set clear regulations for stock management, account receivables and payable control, and cash movement forecasting. Management in SOEs need to perform sensitivity analysis and scenario planning to examine how different factors impact investment outcomes. It is important for finance, operations, and other sectors to ensure investment decisions and strategic decisions align. Organizations need to incorporate risk assessment and sensitivity analysis to enhance investment opportunities appraisal.enThesis