Book

Description

Manufacturing firms face uncertainty both financial and non financial which affect their financial performance. Financial uncertainties were drawn from items of balance sheet. One of the items of interest was trade credit uncertainty focusing on the debts and bad debts. Debts in this case means account receivables from goods sold without receiving Cash. From the study the author was able to establish the relationship between trade credit uncertainty using Defaulty rate and credit exposure rate as proxies. Financial performance was measured by Return on Sales and Return on Equity. Diagnostic tests were done on assumptions of linear regression. From results, Trade credit had positive significant impact on financial performance of manufacturing firms. The period under the study showed that performance of manufacturing firms had downward trend. Meaning performance had been declining. There is need for manufacturing firms to monitor trade credits since their volatility has significant impact on their bottom line.