Abstract:
The purpose of research was to assess the effect of budget practices on financial performance of manufacturing companies in Rwanda. The specific objectives are to establish of effectiveness of budget practices applied by BRALIRWA PLC, to determine the level of financial performance of BRALIRWA PLC and to assess the relationship between budget practices and financial performance of BRALIRWA PLC. The purposive sampling technique was used to select the study population as being key informants to study. Questionnaire, interview and documentation was used to collect data. The data was analyzed using both statistical and narrative methods. The results of the findings are The results indicated that majority of the respondents with mean which is equal 4.28 and standard deviation =1.157 were in agreement that; their budgets have clear goals and objectives, (Mean=3.49 and Std D.= 1.649) said that their Bralirwa Plc has long term and short term budget plans, (mean=3.06 and Std=1.374) said that all departments of Bralirwa Plc prepare budget plans prior to the budget year, (mean=4.08 and std.=1.205) said that when budgeting, outcome goals and objectives are linked to programs, (mean= 4.01 and std.=0.802) revealed that budgets cover all the aspects of the goals and objectives. Bralirwa Plc’s net profit margin has been increased up to 14.18% and 14.3% due to the budget practices as seen on the table from 2021 up to 2022. The contribution of budget practices to the net profit margin, the use of budget practice has been contribute significantly to the financial performance of Bralirwa Plc. The return on asset during the research period from 2019-2022 were 1.15%, 7.08%, 15.05% and 14.45. ROA means that 100 Rwf invested in asset Bralirwa Plc has generated 1.15 Frw in 2019, 100 Rwf invested in asset from 2020 generated 7.08 Frw, 100 Rwf invested in asset obtained 15.05 Frw from 2021 while 100 Frw invested in Assets of company generated 14.45 Frw in 2022. During the research period from 2019-2022, ROE ratio are the following: 4.04%, 21.2%, 34.3% and 40.2% respectively. It means that 100 Frw invested by shareholders generated the 4.04 Frw in 2019, 100 Frw invested in equity of Bralirwa generated 21.2 Frw from 2020, 100 Frw invested by shareholders generated 34.3 Frw from 2021, and 100 FRW invested by shareholders generated 40.2 Frw respectively.
