CREDIT TERMS AND FINANCIAL PERFORMANCE OF ROOFINGS
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Date
2024-09-18
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Publisher
UCU
Abstract
This study investigated the effect of credit terms on the financial performance of manufacturing
companies located in Nakawa division, it being a major home to most of Uganda’s manufacturing
firm, focusing specifically on Roofings Group. The major objectives that were examined in this
study included the effect of interest rates, to examine the influence of collateral security and to
establish the relationship between credit terms and/on the financial performance of Roofings.
Literature review from different sources were acknowledged and used as references in this report.
A cross-section research design approach was used during the research study and both qualitative
and quantitative approaches of research design were adopted. Questionnaires were issued out to
the different respondents that made up the study population. The study population consisted of
employees of Roofings Group with a target population of52 respondents. From these, using both
Yamane and Krejcie and Morgan formulae, a sample size of 46 respondents were obtained and
these actively took part in filing out the questionnaires given to them. Both simple random and
purposive sampling methods were used to obtain unbiased and precise information on credit terms
and financial performance of Roofings and data collected was to the best of the respondents’
knowledge as far as the two variables were concerned. It was discovered that interest rates
negatively impact the firm’s profitability, and that high interest rates result into high borrowing
costs to the firm hence affecting its general financial performance. It was also mentioned that
interest rate fluctuations create uncertainty making it difficultto manage finances. To mitigate this,
firms should negotiate credit terms that are favorable to both the firms and financing institutions
and also firms should monitor interest rate trends to help anticipate changes and make adjustments
in their financial strategies accordingly.