Effect Of Financial Management Determinants On Financial Performance Of Tea Processing Factories In Nandi County, Kenya. Moderating Role Of Firm Size

Abstract

One crucial instrument for strengthening the company's position is financial management. Since it's crucial to management, investors, shareholders, and other stakeholders who participate in the securities markets, it's influenced by a number of factors. Finding out how financial management factors affected the financial health of tea processing plants in Kenya's Nandi County was the main goal. The function of firm size in moderating. The study employed the following specific goals: to ascertain the impact of equity shares on the financial performance about tea processing factories, to ascertain the impact of leverage on the financial achievement of tea manufacturing facilities in Nandi County, and to ascertain the effect of liquidity on those financial outcomes. The investigation was carried out in the tea processing industries in Nandi County. Pecking order theory, agency theory, and liquidity preference theory. Cross-sectional research design was used in the study. The Nandi County target population consisted of 19 factories, and the random sampling approach was employed to select a sample size of 18 factories. Data form annual reports were collected for the study using a data collection sheet. The mean, minimum, maximum, and deviations from the mean were employed in descriptive statistical techniques to examine the data. Moreover, correlations as well as simple and multivariate regression analyses were employed in inferential statistics to ascertain the relationship between the variables. The study found a substantial, positive, and significant association between the financial performance of the tea processing industries in Nandi County and the ratios of liquidity and debt. Equity shares also had a noteworthy and moderate impact. Regression study further showed that the financial performance of the tea processing companies in Nandi County was significantly and favorably impacted by financial management factors. The study also demonstrated that the association amongst financial management determinants as well as financial performance was positively and significantly moderated by firm size. The study came to the conclusion that the financial performance of the tea processing plants in Nandi County was positively and significantly correlated with liquidity, leverage, and equity shares. The study recommended that, factories with low shareholders like Tinderet Tea estate should look for ways of raising more funds through issuance of more share to new or existing shareholders, converting creditors into equity shareholders. This would give them an opportunity to get more shareholders on board, more capital for investment and hence enhanced financial performance.