Financial Management Practices and Financial Performance of Services Industry in Kenya: Case of Kenya Airways
Abstract
The main purpose of this study was to examine financial management and performance of the listed firms in the commercial and services segment using Kenya Airways as a case study. The paper established the effect of the financing, dividend, liquidity and investment decisions on the financial performance of the firms listed in the commercial and services segment. A quantitative time series research design was adopted in the study. The target population included all the management practices and financial performance data for Kenya Airways since listing. The sample period was the period 2008 - 2017. Secondary data was collected for the construction of the variables under study using a secondary data collection template. Both descriptive and inferential statistics were used to analyze the data collected. From the first objective the study found a negative and statistically significant effect of financing decision on financial performance of Kenya Airways; concerning the second objective the study found that the dividend decision had a negative and statistically insignificant effect on the financial performance of Kenya Airways. From the third objective the findings show that liquidity decision had a positive and statistically insignificant on the financial performance of Kenya Airways. From the fourth objective findings showed that the investment decision on had a positive and statistically financial performance of Kenya Airways was positive and statistically insignificant. From the findings of first objective which was to establish the effect of financing decision on firm performance of Kenya Airways, the study concludes that for the period under study, financing decision a negative and statistically significant on financial performance of Kenya Airways while dividend decision, liquidity decision and the investment decisions had no significant effects on the financial firm performance of Kenya Airways. From objective one the study recommended that firms should be wary of the capital expenditure to total assets ratio and should always work towards an optimal ration that does not negatively affect their financial performance. On the second objective the study recommended that more studies be done in this area to ascertain the exact effect of the dividend decision on firm financial performance. Concerning the third objective the study recommended that more studies be done in this area to ascertain the exact effect of the liquidity decision on firm financial performance and on the fourth objective the study recommended that more studies be done in this area to ascertain the exact effect of the investment decision on firm financial performance.
Keywords: Financial Management Practices, Services Industry, financing decision, dividend decision, liquidity decision, investment decision, financial performance, Kenya Airways.
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