| dc.description.abstract | Exchange rate plays an increasingly significant role in motor vehicle industry in
Kenya as it directly affects domestic selling price level, profitability, allocation of
resources and investment decision in the industry. The fluctuation or volatility in the
exchange rate has attracted public attention especially from importers who have
argued that the strengthening shilling is eroding their competitiveness (Ndung’u,
2000). The study objective was to determine the effect of foreign exchange rate
fluctuation on the financial performance of motor vehicle firms in Kenya. Secondary
data was collected from the Companies Financial Report. Regression analysis was
done for the periods to determine the effect of foreign exchange rate fluctuation on the
financial performance of motor vehicle firms in Kenya. The study covered a period of
10 years from year 2003 to 2012. The study revealed that there was negative
relationship between translation exposure using sales, translation exposure using raw
material cost, transaction exposure using accounts receivable, transaction exposure
using accounts payable, total machinery and equipment, economic exposure and firm
financial performance, this is an indication that foreign exchange rate fluctuation
negatively affect the firm financial performance , thus the study concludes that
foreign exchange rate fluctuation negatively affect financial performance of motor
vehicle firms in Kenya. From the findings and conclusion the study recommends that
companies in motor vehicle industry should apply various hedging techniques which
are most effective in order to reduce the risk by foreign exchange rate fluctuation. | en_US |
