School of Business
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Item Influence of leverage on financial performance of deposit-taking SACCOS in Kenya(Kca University, 2016) Kimani, Grace Wanjiku.In today’s business environment, deposits taking SACCOs are now competing with commercial banks for customers. Deposits taking SACCOs have therefore resorted to borrowing from commercial banks to satisfy their member’s demand for loans. Member deposit as source of finance in Deposit taking SACCOs also attract interest which must compete with banks rates on deposit. The influence of leverage on financial performance of deposit taking SACCOs is therefore crucial in helping management make informed capital structure decisions. While past studies on capital structure in Deposit taking SACCOs in Kenyan have used correlation and regression analysis, no paper has considered long term debt, short term debt and total debt separately. The purpose of this study was to investigate influence of the different levels of leverage on the financial performance of deposit taking SACCOs in Kenya. The measure of financial performance were return on assets, return on equity and earnings per share. This study adopted a descriptive research design. Since the period of the study was four years from year 2011 to year 2014 our population was the 44 Deposit taking SACCOs licensed in 2011. The study used data limited to deposit taking SACCOs that were registered with Sacco Society Regulation Authority (SASRA) for the period of four years from year 2011 to year 2014. This study applied panel regression data analysis. The study concludes that debt financing influence the performance of SACCOs. The three levels of debt financing that is total debt, long term and short term debt has varying effect on financial performance of SACCOs. Total debt to assets ratio was seen to be positively linked to return on assets while long term debt had an inverse relationship with return on assets. Short term debt had insignificant relationship with the three measures of performance that is return on assets, return on equity and earnings per share. The study therefore recommends that based on these findings managers in SACCOs should focus more on short term debts to finance their operations rather than long term debts in order to give favorable financial results.Item Determinants Of the Capital Structure of Companies Listed on The Nairobi Securities Exchange(KCA University, 2015) Muhumed, Shakir H.The increasing trend of abrupt corporate failures both locally and globally are incensing growing concern among shareholders and other stakeholders alike. This has made these stakeholders to question the performance of their firms. Capital structure is arguably the core of modern corporate finance. This study sought to examine the determinants of capital structure of firms listed on the NSE. While the specific objectives were: To determine the effect of profitability on capital structure for companies listed in NSE, to establish the effect of growth opportunity on capital structure for companies listed in NSE, to establish the effect of firm size on capital structure for companies listed in NSE, to evaluate the effect of firm age on capital structure for companies listed in NSE, and to evaluate the effect of asset tangibility on capital structure for companies listed in NSE. The study reviewed trade off, pecking order and Modigliani and Miller theories that underpinned the study. Longitudinal research design was used. The study was a census study of all the firms listed in the NSE between 2003 and 2013. Secondary data from certified financial records of the firms was extracted and both descriptive and inferential statistics used. The data was both cross sectional and time series in nature and therefore panel data model was used. The study results established that firm profitability, growth opportunity, firm size, firm age and asset tangibility all had no significant effect on total debt of firms listed in NSE in Kenya. In regard to equity levels, the study established that profitability and asset tangibility have a significant effect on equity to total assets ratio. However, the study reveals that that firm size, firm age and growth opportunity have no significant influence on equity to assets ratio. From the study results, recommendations were made to managers of firms to observe present and future profitability of their firms as it is deemed as a major determining factor in capital structure and hence in determining the cost of capital and value of the firm. Further managers should also ensure that they effectively manage their assets to enable the firm’s assets to remain of high quality so as to contribute in the firm’s earning power.