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Determinants of Financial Performance of Consumer Goods Service Firms in Rwanda

Obiora Peters, Emeka PhD, Mahamat Abderaman Ibrahim

Abstract

This study investigates the determinants of financial performance for consumer goods service firms listed on the Rwanda Stock Exchange (RSE), specifically Bralirwa Ltd and Cimerwa, from 2014 to 2023. Employing a longitudinal design, Multiple Least Squares (MLS) regression, the research examines the effects of financial leverage, cost of sales, market demand, and asset turnover on financial performance, measured by Return on Equity (ROE), Return on Assets (ROA), and Price-to-Earnings (P/E) ratio. Findings reveal that financial leverage significantly reduces performance (ROE: ? = -1.311, p = .001; ROA: ? = -0.544, p = .000; P/E: ? = -567.389, p = .026), reflecting the burden of high debt in Rwanda’s high-interest-rate environment. Market demand positively influences ROE (? = 2.144, p = .049) and ROA (? = 0.52, p = .069), while asset turnover enhances ROE (? = 0.668, p = .077) and ROA (? = 0.185, p = .070), underscoring the importance of consumer-centric strategies and operational efficiency. Cost of sales shows no significant impact (p > .3). The study contributes to Rwanda’s limited financial literature, offering insights for firms to optimize debt, leverage digital platforms, and improve supply chain efficiency, and for policymakers to foster sustainable economic growth.

Keywords

Financial performanceConsumer goodsRwandaFinancial leverageMarket

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