FINANCIAL PLANNING AND FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS IN MOMBASA COUNTY
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Abstract
This study sought to investigate the effect of financial planning on financial performance of manufacturing firms in Mombasa County. The target population of the study was 100 senior management staff of manufacturing firms in Mombasa County. Stratified sampling technique was used in the study. For this study, data was collected using structured questionnaires based on the research questions. Data analysis was done with the help of Statistical Package for Social Science (SPSS) version 29. The study established that budgeting process is participatory in manufacturing firms and the firms have proper cash budgeting which ensures that the organization always has a healthy cash position. All the study variables—budgeting, financial forecasting, financing decisions, and cash flow projections—show statistically significant positive relationships with financial performance, underscoring their collective importance in enhancing the financial performance of manufacturing firms in Mombasa County. The study established that manufacturing firms identify the volumes of finance required through financial forecasting and that the firm conducts expenditure forecasting to identify anticipated expenditures. The study established that availability of variety of sources of finance improves financial performance of the firm and that identification of sources of finances improves the financial performance of the firm. In conclusion, the study established that budgeting, financial forecasting, financing decisions, and cash flow projections all significantly and positively affect the financial performance of manufacturing firms in Mombasa County. Among these variables, budgeting had the strongest influence, followed by financing decisions, cash flow projections, and financial forecasting. The study recommends that the management of the manufacturing firms should ensure total participation of all departments in budgeting making decisions. The study recommends that the manufacturing firms should develop financial systems which have the capability of accurately forecasting future financial needs of the firm.
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