| Author's Name: |
Isabwa Kajirwa Harwood & Albert Cheruyoit |
| Subject Area: |
Social Science and Humanities |
| Subject |
Finance |
| Section |
Research Paper |
Keyword:
Long term loan, ROA, ROE
Abstract
This study analyses the effect of long term loan of performance of selected sugar firms in Kenya. The specific objectives were to: find out the effects of long term loan on firm performance, determine the relationship between long term loan and firm performance. The study used a retrospective research strategy in collection of data. A target population of 9 sugar firms was considered in the study. A sample size of 3 firms was used in the study computed based on Mugenda and Mugenda (2003) 10 - 30% rule and simple random sampling was used in the collection of data from the sample. The test retest method was used to test for reliability. The data was then analyzed using multiple linear regression models and Pearson product moment correlation. The study found that Long term loan negatively affects ROA although not statistically significant (ß -. 479, p<0.05). Long term loan was strongly related to firm performance as measured by ROA. The conclusions of the study were that Long term loan negatively affects firm performance although not statistically significant. The study recommended that sugar firms should manage well the portfolio of its long term debt structure to minimize the risks associated with adoption of the various forms of long term debt.