DETERMINANTS OF FINANCIAL PERFORMANCE OF REAL ESTATE FIRMS IN MOMBASA COUNTY, KENYA
Abstract
The researcher assessed the determinants of real estate firms' financial performance in Mombasa County. A descriptive research design was adopted to specify data collection, processing, analysis and interpretation. The target population comprised the managers and accountants of all the 48 real estate firms in Mombasa County. The study adopted a census technique; thus, all the 96 real estate firms' managers and accountants in Mombasa County were included into the study. The data collection tools were structured questionnaires. Data analysis and analysis was aided by Statistical Packages for Social Sciences (SPSS). Descriptive research findings showed that liquidity, risk management, financing decisions, and cost control affect financial performance of real estate firms. In correlation analysis, the correlation coefficients were (r=.703**; p=0.000), (r=.292*; p=0.012), (r=.557**; p=0.000) and (r=.434**; p=0.012) for liquidity, risk management, financing decisions and cost control respectively. The results implied that all the determinants have a significant effect on financial performance. In regression analysis, the coefficient of determination was 0.674. It implied that liquidity, risk management, financing decisions and cost control explained 67.4% variation in financial performance of real estate firms in Mombasa County. The study concluded that management of liquidity of vital importance in promoting revenue growth and return on assets of real estate firms. Further, the management of financial risks such as credit and operational risks enable firms to coordinate and control necessary financial information and processes. This enhances the understanding of the opportunity for financial performance measurement. It was also concluded that cost control contribute to reduction of expenses which reflect an in increase in net returns of the real estate firms. The study recommended the managers of real estate firms to incorporate liquidity management aspect into the overall financial management function to enhance their ability to meet the short-term financial needs. They should also focus comprehensively on the distinctive dimensions of financial risks and integrate them into the decision making. The study's findings would be beneficial to real estate firms in suggesting ways to generate more returns and strategies for managing risks to avoid losses and improve financial performance. The land and housing policymakers will also apply the findings of the study to improve the policies concerning real estate development as well as operations of real estate firms.
Key Words: Liquidity, Risk Management, Cost Control, Financing Decisions
CITATION: Wambua, F. N., & Wekesa, M. (2022). Determinants of financial performance of real estate firms in Mombasa County, Kenya. The Strategic Journal of Business & Change Management, 9 (4), 1019 – 1040.
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DOI: http://dx.doi.org/10.61426/sjbcm.v9i4.2466
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