dc.contributor.author | Runo, Fredrick N | |
dc.date.accessioned | 2014-01-11T13:30:17Z | |
dc.date.available | 2014-01-11T13:30:17Z | |
dc.date.issued | 2013 | |
dc.identifier.citation | Degree Of Master Of Business Administration (MBA), | en_US |
dc.identifier.uri | http://hdl.handle.net/11295/63221 | |
dc.description.abstract | Firms are exposed to Foreign Exchange Risk if the results of their projects depend on
future exchange rates and if exchange rate changes cannot be fully anticipated it can lead
to major financial losses. This research has examined the influence of foreign exchange
risk on the profits of oil companies listed in the Nairobi Securities exchange namely;
KenolKobil and Total Kenya ltd. The objective of the study was to examine the
relationship between how foreign exchange risk and profitability of oil companies listed
in the Nairobi securities exchange.
Using descriptive analysis, correlation and regression analysis, research results indicated
that the foreign exchange risk greatly influences the profits reported by these oil
companies. Other variables "namely the gross profit and operational expenses were used
as predictors of profitability along with the foreign exchange risk and were also found to
have a strong correlation to the profits. Foreign exchange risk as measures by the foreign
exchange gain/loss reported by these companies was found to carry more weight in
predicting the profitability of these two companies with a correlation coefficient of 95%
Since it was evident that foreign exchange risk greatly affects the profits, It was
recommended that the firm should develop a robust foreign exchange risk management
framework which clearly shows their currency risk assessment
Procedure and implementation of currency risk management strategies. The firm should
also emphasize the use of currency risk transfer strategies through hedging, insuring and
diversification of foreign exchange risk as management strategies in order to cushion
their profits from getting negatively affected by the foreign exchange fluctuations as seen
in both companies where KenolKobil recorded a loss after tax of 6.2 billion Shillings in
2012 out of which 4.6 Billion was comprised of foreign exchange losses whereas Total
Kenya Ltd recorded a loss of202 Million shillings after tax and 81 million out of this was
due to foreign exchange losses. | en_US |
dc.language.iso | en | en_US |
dc.publisher | University of Nairobi, | en_US |
dc.title | Relationship Between Foreign Exchange Risk and Profitability of Oil Companies Listed in the Nairobi Securities Exchange | en_US |
dc.type | Thesis | en_US |