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Effect of Budget and Budgetary Control on Firms Performance: A Case Study of the East African Portland Cement Company Limited

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dc.contributor.author Nafisatu, Amida Daboh
dc.date.accessioned 2018-07-10T11:26:30Z
dc.date.available 2018-07-10T11:26:30Z
dc.date.issued 2018
dc.identifier.uri http://hdl.handle.net/11732/3885
dc.description A Research Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA) en_US
dc.description.abstract The purpose of this study was to evaluate the effect of budgetary control system on the performance of the East African Portland Cement Company Limited. Specifically, the study sought to address the following concerns: What are some of the budgetary control systems applicable at the East African Portland Cement Company? Is there a relationship between budgetary control and employee behavior? Finally, yet importantly, what is the effect of budgetary control on firm performance? Descriptive research design was used to describe the independent variable whereas explanatory research design was used to describe the relationship between the independent and dependent variables in the study. Budgetary control is the independent variable whereas budgetary control types, employee behavior and financial performance were used as the dependent variables. The paper researched on the role of budget and budgetary control on organizational performance: a case study of East African Portland Cement Company. Both primary and secondary data was used in the study. Questionnaires were used to collect primary data whereas secondary data was obtained from the published accounts of East African Portland Cement Company for the period 2012-2016. A total of 45 staff was sampled using the purposive sampling technique, and data obtained was subjected to regression analysis. The research model used in the study comprised of the independent variable sales turnover and the following dependent variables: budgetary control types, employee behavior and measures of financial performance namely: profit before tax, profit after tax and earnings per share. The Statistical Package for Social Sciences (SPSS) was used to analyze the data collected in order to generate descriptive statistics and inferential statistics for the study. Results were presented in form of tables and figures. Relevant recommendations and conclusions were given. Regression analysis was used to describe the extent with which the dependent variables could be explained by the independent variable. The study examined the effect of sales turnover on budgetary controls. The study established that the two variables had a low positive correlation at 32.3%. Concerning the effect of budgetary control on employee behavior, the study found out that budgetary control had a high correlation with employee behavior at 54.7%. As regards the effect of budgetary control on firm performance, the study established that the link between budgetary control and profit before tax was high at 54.4%. However, it was slightly lower in relation to both profit after tax and earnings per share at 49.1%. In conclusion, the study established that there was a low positive correlation between budgetary controls and sales turnover. Thus, the various budgetary control types for instance, short-term form of budgetary control, long-term budgeting, flexible budgeting, zero based budgeting, rolling budgeting and activity-based budgeting are responsible for the low positive correlation. It is therefore recommended that there is need to increase the level of sensitization among management and employees of the East African Portland Cement Company on the importance of budgetary controls in enhancing financial performance. The budgetary control process should consider both firm needs and parameters within the firm during planning to achieve better results. Regarding the effect of budgetary control on employee behavior, the study concluded that the correlation between the two variables was high. It is therefore recommended that the firm should strive to maintain or improve on its employee behavior for instance, employee working relationships, realization of budget, management style, money factor, organizational structure and fulfilment of individual needs. Finally, about the relationship between budgetary control and firm performance, the study concluded that there was a high positive correlation of 54.4% between budgetary control and firm’s financial performance measured in terms of profit before. However, there was a low positive correlation of 49.1% between budgetary control and both profit after tax and earnings. It is therefore recommended that East African Portland Cement Company should encourage implementation of their budgets as planned. In addition, management is also advised to pay more attention to the budgeting processes since it improves firm performance. en_US
dc.language.iso en en_US
dc.publisher United States International University - Africa en_US
dc.subject Budget and Budgetary Control en_US
dc.subject Firms Performance en_US
dc.subject East African Portland Cement Company Limited en_US
dc.title Effect of Budget and Budgetary Control on Firms Performance: A Case Study of the East African Portland Cement Company Limited en_US
dc.type Thesis en_US


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