Analysis of the effects of budgetary control on financial performance of business firms: Case study - MTC Associates

Abstract

The budget is increasingly recognized as the key tool for financial performance. It is nevertheless also recognized that a firm can have a sound budget and financial system and still fail to achieve its intended targets. This suggests that the rules by which the budget is formulated and implemented are important and that they influence financial outcomes. This study analyzed the effects of budgetary control on financial performance of business firms taking a case study of MTC Associates. The major objective of the study was to establish the contribution of budgetary control on the financial performance of business firms. The relationship between budgetary control and financial performance was examined. The study employed both explatory and descriptive survey research design. The study used the Pearson’s chi square test of independence ( ) to establish the relationship between budgetary control and financial performance. The study established that budgetary control had a significant relationship with financial performance at a 5% significance level with the p-value (0.002) being less than the p-value critical (0.05). The emphasis particularly focused on procedures used in budget preparation, objective of budgetary control, effects of budgetary controls on performance, relationship between budgetary control and organizational performance.