INFLUENCE OF FINANCIAL CONTROL ON PROFITABILITY OF SUGAR MANUFACTURING FIRMS IN WESTERN KENYA

Abstract

The general objective of the study was to investigate the influence of financial control on profitability of sugar manufacturing firms in Western Kenya. The specific objectives were to determine the influence of asset control, accounting control system, audit control and budgetary control on profitability of sugar manufacturing firms in Western Kenya. The study targeted 94 respondents from finance, risk, procurement and accounts department of Nzoia Sugar Company, Kibos Sugar, Sukari industries, Sony Sugar, Butali Sugar Company and West Kenya Sugar Company. Census sampling techniques was used to select 94 respondents as they were less than 100. Structured questionnaires were used to collect primary and Descriptive statistics and inferential statistics were used during data analysis with aid of SPSS version 21. The results were presented in tables and models. The results revealed that financial controls have significant influence on the profitability of sugar manufacturing firms in Western Kenya. Using unstandardized B coefficients in Multiple linear regression, the findings revealed that unit change in asset control would result to significant change in profitability by 0.177 units in the same direction; a unit change in accounting control system would result to change in profitability by 0.205 units in the same direction; a unit change in audit control would result to significant change in profitability by 0.336 units and a unit change in budgetary control would result to significant change in profitability by 0.153 units in the same direction. The study therefore concluded that asset control, accounting control system; audit control and budgetary control have positive significant influence on profitability of sugar manufacturing firms in Western Kenya. The study recommended that the management should also have a proper mix of asset portfolio so as to appropriately match with the financial needs of the sugar industry. Sugar manufacturing firms should also undertake periodic forensic audits to detect financial malpractices.