EFFECT OF CAPITAL MIX ON THE FINANCIAL PERFORMANCE OF MANUFACTURING COMPANIES IN RWANDA A CASE STUDY OF BRALIRWA PLC PERIOD:2020-2023

Abstract

The financial performance of manufacturing companies is significantly influenced by their capital mix, which refers to the mix of debt and equity financing. This study investigates the effect of capital mix on the financial performance of BRALIRWA PLC, a leading beverage manufacturer in Rwanda, over the period from 2020 to 2023.The primary objective of this research is to analyze how different components of capital mix namely equity and debt—affect key financial performance indicators such as return on assets (ROA), return on equity (ROE), and profit margins within BRALIRWA PLC. A quantitative research approach was employed, utilizing financial data from BRALIRWA PLC’s annual reports and industry benchmarks. Statistical tools were applied to assess relationships between capital mix ratios and financial performance metrics. In our findings, we observed the increase in capital mix of BRALIRWA PLC from -8.5% in 2020 to 23.1% in 2023, equity ratio was decreased also from 20.1% in 2020 to 12.4% in 2023; the interest coverage ratio was increased from 3.2% in 2020 to 3.5% in 2023;the debt ratio was increased from -22.8% in 2020 to 29% in 2023;retained earning was increased from decreased from from 29.2% in 2020 to 14.3% in 2023,the return on assets was increased from 7.0% in 2020 to 15.3% in 2023,the profit margin ratio increased from 8.4% in 2020 to 16% in 2023,return on equity was increased from 21.1% to 46.7% in 2023,the liabilities increased from 21.5% in 2021 to 83.6% in 2023,the debt to equity ratio increased from 1.98% in 2020 to 2.04% in 2023;debt to total assets increased from 0.66% in 2020 to 0.67% in 2023,total debts service include interest and payments decreased from 2.3% to 0.423% in 2023,the return on investments increased from 10.0% in 2020 to 24.1 % in 2023,and the earning per share was decreased from 78.13% in 2020 to 69.3 in 2023. In brief ,all hypothesis are confirmed because it was observed that capital mix at BRALIRWA PLC during the period of 2020-2023 was significantly changed due to the influence of external economic factors and internal financial policies and there is a statistically significant relationship between the capital mix employed by BRALIRWA PLC and its key financial performance indicators (FPIs) from 2020 to 2023, suggesting that variations in capital mix directly affect profitability, liquidity, and solvency ratios.