Budgetary Control Practices and Financial Performance of Salt Manufacturing Firms in Kilifi County, Kenya

Abstract

The numerous financial difficulties faced by salt manufacturing firms in Kenya have resulted in the closure of many businesses, as they are unable to operate efficiently and sustainably. These financial shortcomings have largely been attributed to weak adherence to cash control practices. This study sought to examine the effect of budgetary control practices on the financial performance of selected salt manufacturing firms in Kilifi County, Kenya. The study was guided by the Stewardship Theory. A descriptive research design was employed, targeting a population of 1,100 employees from the four salt manufacturing firms in Kilifi County. A sample of 293 respondents, consisting of senior and middle level managers, were selected. Primary data was collected using structured questionnaires, while secondary data was obtained from audited annual financial statements of the firms. A pilot study was conducted in salt manufacturing firms located in Mombasa County, with questionnaires distributed to finance officers. Reliability testing using Cronbach's alpha yielded a coefficient of 0.814, indicating strong internal consistency. Additionally, the Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy for budgetary control practices was 0.784, surpassing the acceptable threshold of 0.5. Data analysis involved both descriptive and inferential statistics, with the help of the Statistical Package for Social Sciences (SPSS). Inferential analysis included correlation and regression analysis, and ANOVA tests were also carried out. The findings revealed that budgetary control practices have a significant positive influence on the financial performance of manufacturing firms in Kilifi County. The study concluded that effective budgetary control practices notably enhance financial performance. Therefore, future research should focus on additional factors that may influence the financial performance of manufacturing firms across the country to establish more comprehensive conclusions.