Thesis:

Effect of financial planning on performance of manufacturing firms in Mombasa county, Kenya

To guarantee strong financial performance at any given time, a company operating in a highly competitive environment must develop a thorough financial plan that takes the competitive environment into account. The current trend in technology has made it easier for businesses to create intricate financial plans and budgets that will serve as a roadmap for improving their financial performance going forward. This has made it possible for numerous businesses and industries, including the banking sector, to create a comprehensive financial strategy that would improve their financial performance. The current study sought to investigate the effect of financial planning on performance of manufacturing firms in Mombasa County. Specifically, the study sought to examine the effect of budgeting, financial forecasting, financing decisions and cash flow projection on financial performance of manufacturing firms in Mombasa County. The study was anchored on pecking order theory, signaling theory and agency theory. A descriptive survey design was used for this study. One hundred senior management employees of manufacturing companies in Mombasa County were the study's target group. The study targeted a population of 61 respondents from the 61 manufacturing firms hence census sampling technique was employed. The Solving formula was used to choose a sample of 61 responders. Based on the research topics, standardized questionnaires were used to gather data for this study. Reliability was ensured using Cronbach alpha coefficient while for validity, experts from the department verified the study instrument. Version 29 of the Statistical Package for Social Science (SPSS) was used to analyze the data. Descriptive statistics included frequencies distribution, and percentages and mean, while inferential statistical analysis included correlations, and regression analysis. Descriptive statistics included frequencies distribution, and percentages and mean, while inferential statistical analysis included correlations, and regression analysis. overall model explaining 89.7% of the variance in firm performance (R² = 0.897, p < 0.001). Budgeting significantly influenced performance (β = 0.385, p < 0.001), financial forecasting had a positive effect (β = 0.261, p < 0.001), financing decisions also contributed positively (β = 0.242, p = 0.012), and cash flow projections were significant predictors (β = 0.265, p = 0.007). The findings conclude that effective financial planning, including budgeting, forecasting, financing decisions, and cash flow management, enhances manufacturing firm performance. It is recommended that firms strengthen these financial planning practices to improve profitability and operational efficiency.