Capital Structure, Investment Decision and Financial Performance of SMEs in Uganda A Case of Central Uganda

The paper explored the relationship between capital structure, investment decision and financial performance of SMEs in Uganda a case of Central Uganda. The study adopted a descriptive, crosssectional and correlational design. The sample size was 226 SMEs in Central Uganda. The findings point to a...

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Main Author: Turyahebwa, Abanis
Format: Article
Language:en_US
Published: International Journal of Scientific Research and Management (IJSRM) 2022
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Online Access:http://hdl.handle.net/20.500.12493/689
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author Turyahebwa, Abanis
author_facet Turyahebwa, Abanis
author_sort Turyahebwa, Abanis
collection KAB-DR
description The paper explored the relationship between capital structure, investment decision and financial performance of SMEs in Uganda a case of Central Uganda. The study adopted a descriptive, crosssectional and correlational design. The sample size was 226 SMEs in Central Uganda. The findings point to a moderate significant positive relationship between capital structure, investment decision and financial performance of SMEs. Capital structure and financial performance of SMEs (r = 0.642, P-value = 0.000), investment decision and financial performance of SMEs (r = 0.488, P-value = 0.000). From the results, we confirm that capital structure, investment decision, predict up to 66.2% of the change in financial performance of Small and Medium Enterprises in Central Uganda The results show good model fits and fig.2 defines the model of capital structure and investment decisions on financial performance of SMEs in Uganda and is encompassed of 4 proportions of capital structure in terms of Equity, Long term Debt, Short term debt as well as investment decisions and their predictive power on financial performance of SMEs in Uganda. Figure 2 and table 1 and 2 clearly indicate that capital structure and investment decisions are significantly associated with return on assets (ROA) which in turn leads to improved financial performance. The study recommends an appropriate mix of capital structure coupled with premeditated investment decisions so as to have improved financial performance of SMEs in Uganda. The current study underwrites to academic research by providing empirical proof to support theories pertinent to the elucidation of financial performance. The study was anchored on Pecking Order theory together with Modigliani & Miller theory and the results depict the behaviours that managers have while making decisions concerning capital structure and investment decisions. With such, the precursors of capital structure, investment decisions on financial performance of SMEs in Uganda and other related developing countries has been revealed.
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spelling oai:idr.kab.ac.ug:20.500.12493-6892024-01-17T04:45:58Z Capital Structure, Investment Decision and Financial Performance of SMEs in Uganda A Case of Central Uganda Turyahebwa, Abanis Capital Structure, Investment Decision, Financial Performance, SMEs, Uganda. The paper explored the relationship between capital structure, investment decision and financial performance of SMEs in Uganda a case of Central Uganda. The study adopted a descriptive, crosssectional and correlational design. The sample size was 226 SMEs in Central Uganda. The findings point to a moderate significant positive relationship between capital structure, investment decision and financial performance of SMEs. Capital structure and financial performance of SMEs (r = 0.642, P-value = 0.000), investment decision and financial performance of SMEs (r = 0.488, P-value = 0.000). From the results, we confirm that capital structure, investment decision, predict up to 66.2% of the change in financial performance of Small and Medium Enterprises in Central Uganda The results show good model fits and fig.2 defines the model of capital structure and investment decisions on financial performance of SMEs in Uganda and is encompassed of 4 proportions of capital structure in terms of Equity, Long term Debt, Short term debt as well as investment decisions and their predictive power on financial performance of SMEs in Uganda. Figure 2 and table 1 and 2 clearly indicate that capital structure and investment decisions are significantly associated with return on assets (ROA) which in turn leads to improved financial performance. The study recommends an appropriate mix of capital structure coupled with premeditated investment decisions so as to have improved financial performance of SMEs in Uganda. The current study underwrites to academic research by providing empirical proof to support theories pertinent to the elucidation of financial performance. The study was anchored on Pecking Order theory together with Modigliani & Miller theory and the results depict the behaviours that managers have while making decisions concerning capital structure and investment decisions. With such, the precursors of capital structure, investment decisions on financial performance of SMEs in Uganda and other related developing countries has been revealed. Abanis Turyahebwa 2022-10-03T20:42:25Z 2022-10-03T20:42:25Z 2022-07-07 Article Turyahebwa et al 2321-3418 2321-3418 http://hdl.handle.net/20.500.12493/689 en_US Volume 10;Issue 07 application/pdf International Journal of Scientific Research and Management (IJSRM)
spellingShingle Capital Structure, Investment Decision, Financial Performance, SMEs, Uganda.
Turyahebwa, Abanis
Capital Structure, Investment Decision and Financial Performance of SMEs in Uganda A Case of Central Uganda
title Capital Structure, Investment Decision and Financial Performance of SMEs in Uganda A Case of Central Uganda
title_full Capital Structure, Investment Decision and Financial Performance of SMEs in Uganda A Case of Central Uganda
title_fullStr Capital Structure, Investment Decision and Financial Performance of SMEs in Uganda A Case of Central Uganda
title_full_unstemmed Capital Structure, Investment Decision and Financial Performance of SMEs in Uganda A Case of Central Uganda
title_short Capital Structure, Investment Decision and Financial Performance of SMEs in Uganda A Case of Central Uganda
title_sort capital structure investment decision and financial performance of smes in uganda a case of central uganda
topic Capital Structure, Investment Decision, Financial Performance, SMEs, Uganda.
url http://hdl.handle.net/20.500.12493/689
work_keys_str_mv AT turyahebwaabanis capitalstructureinvestmentdecisionandfinancialperformanceofsmesinugandaacaseofcentraluganda