Effect Of Financial Management Decisions On Performance Of Manufacturing Firms Listed On Nairobi Securities Exchange

Abstract

The effect of finance management on manufacturing firm performance in Kenya needs to be studied. Using panel research design, the study seeks to investigate the effect of finance management decision on listed manufacturing firm performance in 2005 to 2014. Specifically the study seeks to establish the effect of leverage and manufacturing firm performance among listed companies in NSE. To determine the effect of investment decision on manufacturing firm performance, to find out the effects of dividend policy on manufacturing firms' performance and to establish the effect of working capital on manufacturing firm performance. The target population of this study was all the nine manufacturing listed companies in Kenya. The study was based on secondary data which was collected from the published annual reports for listed companies manufacturing firms in (2005-2013). Both Microsoft excel and E views 8 were used to analyse the data. A graphical method was used to explore the data. Panel regression analysis was used to examine the relationship between independent and dependent variables. Results of the study revealed that there was negative relationship between investment and EBIT while leverage, dividend, working capital and total assets had a positive relationship with EBIT. There was a positive relationship between annual sales and investment, leverage, dividend, working capital and total assets. There was a positive relationship between leverage, dividend, working capital, total assets and gross profit while investment had an inverse relationship. The firms should examine their credit rating, predict their chances of bankruptcy. Secondly, they should evaluate all the investment decisions to ensure that they attain optimal benefits from all capital expenditure. Manufacturing company annual dividend policy ought to be examined to ensure that it meets the unique needs of all investors. The firms should evaluate the working capital decision so that they can adapt the optimal working capital cycle.