Title:
INFLUENCE OF FINANCIAL STRUCTURES ON PROFITABILITY OF SUPERMARKETS IN CENTRAL BUSINESS DISTRICT NAIROBI CITY KENYA

Authors:
Stephen Kimani Kiarie, DR. Clement O. Olando, Kenya

Abstract:

Financial structure is combination of preference capital, equity capital, internal reserves and debt capital. Supermarkets in Nairobi have been facing financial challenges in their operations that have resulted to poor performance of Supermarkets. The poor performance has resulted to closure of major supermarkets in Nairobi CBD and other parts of the country. Thus, this research aims to investigate influence of financial structures on profitability of supermarkets in central business district Nairobi city Kenya. Specific objectives of research were to determine influence of long term financing on profitability of supermarkets, to establish influence of medium term financing on profitability of supermarkets, to examine influence of short term financing on profitability of supermarkets in CBD Nairobi City Kenya. The investigation used cross sectional descriptive research design. Target populace were 36 branch managers and accountants of all supermarket branches in CBD Nairobi city. The study used census approach. Primary information was gathered using questionnaires and secondary data was extracted from financial statements and annual reports. Descriptive statistics were involved to evaluate the information utilizing SPSS model 22. The study used a Pearson’s correlation and multiple regression to show influence of the financial structures on profitability of supermarkets. Information was displayed in figures, tables and graphs. The study established that long term financing, medium term financing and short term financing positively and insignificantly influences profitability of supermarkets in CBD Nairobi city. Study concluded that long term financing, medium term financing and short term financing positively and insignificantly affects the profitability of supermarkets in CBD Nairobi City. Study recommends that supermarkets should employ more long term finances, medium term finances and short term finances since they are best choice of expanding productivity. Further recommends that government ought to boost retail sector through special loan scheme with terms that are not oppressive for supermarkets.