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Mahat Bishar Abdi - Masters Student, Kenyatta University, Kenya

Dr. Vincent Shiundu Mutswenje (PhD) - Department of Accounting and Finance, Kenyatta University, Kenya


The financial performance of the manufacturing companies listed on the NSE, Kenya lends significantly to the expansion of Kenya's industrial sector, stock market, and overall economy. Due to the different difficulties, this financial performance could be jeopardized and result in a falling trend. As proven during a five-year period, from the years 2017 to 2021, some manufacturing enterprises' financial performance continues to deteriorate and fluctuate irregularly despite having implemented budgetary processes. Since the implementation of budgetary procedures is meant to enhance financial performance, the irregular financial performance of manufacturing enterprises persists. In light of this, it is yet unknown if the budgetary process has a substantial impact on the financial performance of manufacturing enterprises. In light of this context, the study aimed to ascertain the relationship between budgetary process and financial health of manufacturing enterprises traded at NSE, Kenya. The study's specific objectives are to ascertain the impact of budgetary planning, involvement, control, and evaluation on the financial health of manufacturing enterprises traded at NSE, Kenya. Research hypotheses was evaluated at a significance level of 0.05. Three theories—the incremental budgeting theory, the priority-based budgeting theory, and the risk-based budgeting theory. The study employed a correlational research design and the target audience were forty five respondents from nine manufacturing firms traded at the NSE in Kenya from which the study adopted a census. Primary data was used to collect data on the independent variables whereas secondary data collected data on the dependent variable. The analysis procedure entailed the utilization of descriptive statistics with focus on means and standard deviation, and inferential statistics by running an OLS multiple Regression model with the aid of SPSS Software (Version 26). Normality, multicollinearity and heteroscedasticity tests were run prior to the actual analysis. The analyzed data was then displayed using graphs, frequency tables and charts. Ethical consideration measures was adhered to during the entire research. The study and found that budgetary planning and budgetary control were statistically significant and thus the null hypotheses was rejected. Whereas budgetary participation and budgetary evaluation were both statistically insignificant and thus the null hypotheses was not rejected. The study recommends the application of budget plans that are generated utilizing historical data as a reference point where it outlines the allowances and variances to be applied to the varying parameters before line managers prepare budgets for each of their departments to help improve the financial health of industrial firms traded at NSE. It also recommends that budgetary control should start at the lowest levels, aligning of real results and adhering firms strategic planning and operational control that helps to improve performance of industrial firms traded at the NSE.

Full Length Research (PDF Format)