The factors affecting profitability in Kibo Match corporation
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Date
1996
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Publisher
University of Dar es Salaam
Abstract
The Kibo Match Corporation Limited (KMC) is one of the manufacturing industries in Tanzania. It is the only manufacturer of match box in the country. This study analyses the main factors that affect profitability in KMC for the period 1984-93. In order to identify the factors that may affect profitability of the company, theory and literature on some selected determinants of profitability (determinant depends on inter-alia the type of business) are reviewed. In many industries, profitability is constrained by falling productivity. However, in KMC there are contradicting trends between that of falling productivity and that of increasing profitability for the period 1984-93. The problem area of this study therefore, is to identify the main factors that affect the increasing trend of profitability in the situation of falling productivity in the company. The study is interesting because profitability in the company is helpful in improving the revenue of the company itself and the government in general. The study uses Econometric (quantitative) methods of analysis using the time series data covering the period 1984-93. A single Log-linear equation (function) model using the Ordinary Least Squares (OLS) technique of estimation is used to estimate the functional form. Both Simple Linear and Multiple regression methods of analysis are employed. Four hypotheses were tested quantitatively. The hypotheses were based on the relationship between profitability and its determinants (variables) namely; Liquidity position, Capacity utilization, Equity capital, and Average price of the commodity. The overall regression results indicate that the stated variables are the significant determinants of profitability trend in the company for the period under study. However, it was noted that in Simple Linear regression analysis, Capacity utilization was negatively related to profitability, but in the multiple regression analysis it was positive as per hypothesis. A comparison of the results of the study with others done in Tanzania and abroad was done. The results obtained seem to concur with those of the studies cited. Basing on theory and empirical findings, a number of conclusions and policy recommendations toward improving profitability of the company have been drawn. The study also provides suggestions for further research given the limitations that preoccupied the study.
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Keywords
Industries, Kibo Match Corporation, Tanzania
Citation
Makundi, S. J. (1996) The factors affecting profitability in Kibo Match corporation, Masters dissertation, University of Dar es Salaam. Available at (http://41.86.178.3/internetserver3.1.2/detail.aspx)