Trade Credit Supply and Financial Performance of Manufacturing Firms in Uganda; A case of Crown Supplies International Uganda Limited

Abstract

In this paper a model examining Trade credit supply on the financial performance of manufacturing firms in Uganda; a case of Crown Supplies International Uganda Limited was developed and tested. The objective of the Study was to examine the relationship between trade credit supply and financial performance of manufacturing firms in Uganda.

The study employed a cross sectional research design and focused on a target population of 65 employees from different departments of Crown supplies International Uganda Limited. The researcher got a sample of 62 respondents and used both primary and secondary sources of data. The questionnaire was used as a data collection tool.

The results obtained indicate that 97% of the respondents agreed that there is a relationship between trade credit supply and financial performance of manufacturing firms of Uganda. It further indicated that 92% of the respondents agreed that Crown Supplies international Uganda Limited invoices always prompt payments. Based on the findings, the researcher recommends that Crown Supplies international Uganda Limited should make sure that it reminds clients about the services supplied or goods provided so as to improve its return on assets, return on investment and also to increase its profitability. It should use accounts receivables/trade credit to evaluate the creditworthiness of prospective customers before granting credit.

The researcher recommends that other areas for future research should include: accounts payables techniques and profitability of enterprises plus liquidity of production companies.