INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/3.3article03 www.ijarke.com 29 IJARKE PEER REVIEWED JOURNAL Vol. 3, Issue 3 Feb. – Apr. 2021 Effects of Budget Planning on Financial Performance of Manufacturing Companies in Mombasa County – Kenya Laura Kweng’e Bironga, Kenyatta University, Kenya Samson Kaplelach, Kenyatta University, Kenya 1. Introduction Globally, financial performance is critical to the health and survival of businesses. It is concerned with the level at which they achieve the identified financial objectives. Agbenyo, Danquah and Shuangshuang (2018) state that the foremost objective associated with the financial performance is the maximization of shareholder’s wealth. Therefore, managers have to prioritise it a s it guarantees steady growth, enhances the chance of pursuing future prospects, and offers a buffer against risks. According to Jones (2016), superior financial performance is often connected to better effectiveness and efficiency of managers in utilizing a company’s resources. According to Mgobhozi (2012) budgeting practices are critical to the attainment of the set organizational objectives, which necessitates the effective development and implementation of budgets. Qi (2015) state that the budgeting process may vary in different organisations. For instance, large organisations may have formal processes undertaken by special committees while small ones may entirely be conducted informally by business owners. Organisations can become profitable in a sustainable way by preparing and managing their budgets well (Agbenyo, Danquah & Shuangshuang, 2018). According to Jones (2016), companies in the United Kingdom mostly make budgets to facilitate planning, assessment of performance, and control. Mgobhozi (2012) states that manufacturing firms in US indicated that a positive association that exists between capital budgeting practices such as budget identification, development of capital investments, and budget control, and their financial performance are the main reasons why they create budgets. According to Qi (2015) Chinese SMEs adopt formal budgeting planning processes as they associate them with higher sales revenues. Agbenyo, Danquah and Shuangshuang (2018) on Ghana Stock Exchange evaluated the association between budgeting and financial performance of publicly listed firms and found a positive association between them. Pimpong and Laryea (2016) observed that budget planning and budget monitoring had positive relationship with the performances of Ghanaian firms, which was statistically significant. In Uganda, Kabayaga (2013) indicates that budgeting contributes to organizational performance in terms of time management as way of appropriate time planning and proper distribution of resources which helps manufacturing firms to generate profits in time, and also gives direction on future progress. INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH (IJARKE Business & Management Journal) Abstract The manufacturing sector is expected to carry out a critical role in realisation of Kenya’s Vision 2030 through the creation of employment opportunities and wealth. In the manufacturing sector, high levels of technology and production systems are required, which usually requires enormous large financial resources and hence the need to adopt robust flexible budgets to enhance their financial performance. However, despite the critical role the sector is expected to carry out in realisation of Kenya’s Vision 2030 most manufacturing firms do not have effective budget planning to realize their financial performance goals. This study seeks to establish the effects of budget planning on the financial performance of manufacturing firms in Mombasa County. Descriptive research design was adopted while the study population was finance managers in 44 manufacturing firms of Mombasa County registered under Kenya Association of Manufacturers (KAM). A census approach was used as the target population was considered small. Structured questionnaires were used to gather primary data. Qualitative data was analysed using thematic analysis and findings presented in a narrative form while Inferential analysis for qualitative data was conducted using Statistical Package for Social Sciences (SPSS) version 22) Inferential statistics included correlation and regression analysis. The study concluded that budget planning has positive significant effect on financial performance of manufacturing companies in Mombasa County and recommended that the top management of manufacturing companies within Mombasa County should ensure an in-depth analysis of the available resources and come up with a good budget plan aimed at increasing profitability of the firm. Further the top management should ensure proper record keeping for future reference during budget planning. Key words: Budget Planning, Financial Performance of Manufacturing Firms