Investigating the Nexus between Commodity Pricing and the Financial Performance of Manufacturing Entities in Kenya

The connection between pricing of commodities and financial performance is indisputable. However, very limited research has been done on the effect of commodity pricing on the financial performance of manufacturing companies in Kenya. This paper intends to fill this gap by evaluating the connection between commodity pricing on the financial performance. Data for a ten year period was collected and analyzed where the sales growth ratio and tax were are used as proxy measures for commodity pricing. Long run and dynamic models were applied in the analysis of the data. Sales growth ratio and tax paid both under the long run and the dynamic models were found to significantly influence the financial performance of Kenyan manufacturing firms when measured using both EBITS and ROA. Thus the null hypothesis that commodity pricing does not have a significant relation with the financial performance of manufacturing companies in Kenya was rejected in favor of the alternative hypothesis