FINANCIAL MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE OF DAIRY FIRMS IN KIAMBU COUNTY, KENYA
Kamuttu Michael Muiruri - Master student, Kenyatta University, Kenya
Dr. Vincent Shiundu Mutswenje - Department of Accounting and Finance, Kenyatta University, Kenya
ABSTRACT
Dairy sector keeps on with its crucial and huge contribution to the Kenyan GDP, contributing around 4% to the economy. However, the industry faces many challenges emanating from financial related management activities, hence dwindling financial performance. The study was generally aimed at determining how the financial performance of dairy firms in Kiambu County was affected by the adopted financial management practices. Specifically, the impact of budgeting practices, fixed assets management, credit management practices and managerial capabilities` moderating effect, on dairy firms` financial performance in Kiambu County. The study used descriptive research design, targeted 138 staff drawn from finance departments of all the 17 dairy firms operating in Kiambu County and registered by Kenya Dairy Board. Stratified random sampling method came up with 74 respondents. Well- tailored and structured questionnaires gathered the primary data while a guide extracted from dairy firms` financial records and reports, collected secondary data. SPSS version 26 aided in the descriptive, correlational and multi - variable regression analysis of data as collected, with presentations achieved using tables. The study established that budgeting practices had a β of 0.116, fixed assets management practices, β = 0.063, credit management practices β = 0.121, all above the significance threshold of β < 0.05 and hence indicative they all had significant influence on financial performance of dairy firms in Kiambu County. Additionally, the results reflected change in R- square (0.143, 0.074 and 0.102) for the three models used to test moderating impact of managerial capabilities, therefore signifying presence of moderating impact of managerial capabilities on relationship between financial management practices and financial performance. Findings arrived at, pointed out that most of the respondents agreed with facts that budgeting practices, fixed assets management practices, credit management practices indeed affected financial performance of dairy firms in Kiambu County. Respondents as captured by the findings, strongly agreed that managerial capabilities affected the relationship between the financial management practices and financial performance of the dairy firms. The study recommended that firms should adhere to the approved budgets, ensure proper prior authorization in acquisition, use and disposal of fixed assets, customers appraisals be done prior to credit sales as well as attractive credit staff incentives. Further, the study recommended continuous training of employees and periodical evaluations. The study suggested the need to carry out similar studies on other sectors different from the dairy sector.