Effect of equity on financial performance of supermarkets in Eldoret town

Victor Morangá; Charles Momanyi; Mactosh Onwong'a

doi:10.51867/ajernet.7.4.122

Authors

Victor Kegengo Morang'a Kisii University, Kenya https://orcid.org/0009-0000-7075-2417
Dr. Charles Momanyi, PhD. Kisii University, Kenya https://orcid.org/0000-0002-7809-0574
Dr. Mactosh Onwong'a, PhD. Kisii University, Kenya https://orcid.org/0000-0001-8305-5020

DOI:

https://doi.org/10.51867/ajernet.7.4.122

Keywords:

equity, , financial performance, eldoret town, supermarkets

Abstract

Financial performance in the supermarket sector depends partly on a retailer’s ability to finance inventory, maintain operating capacity and invest in productive assets. This study examined the relationship between equity financing and the financial performance of supermarkets in Eldoret Town, Kenya. A descriptive research design was adopted. The study was anchored on the pecking order and trade-off theories. The study covered 11 supermarkets selected from a population of 18, and obtained 86 usable questionnaires from a planned sample of 97 respondents, representing an 88.7% response rate. Respondents included directors, branch managers, finance controllers and procurement managers. Data were collected using a structured questionnaire and analysed using descriptive statistics and Pearson’s product-moment correlation. Financial performance was operationalised through respondents’ assessments of market share, stock levels, employee numbers and the asset base; these are broader operational indicators rather than audited profitability ratios. Equity financing was positively and strongly associated with the performance measure (r = .796, p < .001). ). Simple regression further indicated a positive and statistically significant association between equity and financial performance (β = .673, SE = .061, t = 11.093, p < .001), with R² = .278. The study concludes that stronger equity financing is associated with better financial performance among supermarkets in Eldoret Town. The findings suggest that respondents who reported stronger equity financing also tended to report stronger operating and market-position indicators. Because the study used a cross-sectional, respondent-based design, the association should not be interpreted as proof that equity alone caused improved performance. The study recommends that supermarket managers assess equity financing in relation to investment productivity, liquidity requirements and the wider financing mix.

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