CAPITAL BUDGETING PRACTICES AND GROWTH OF PRIVATE COMPANIES IN UGANDA: A CASE OF MOVIT PRODUCTS LTD

Author: Lule Simon

ABSTRACT

This paper discusses the effect of capital budgeting practices on growth of Movit Products Limited. The study was carried out using components such as research and development, diversification and mergers/acquisitions.The researcher adopted cross sectional design where self-administered questionnaires were used to collect data from a sample of 40 respondents and a population of 44. The data was analysed using the statistical package for social science (SPSS). The findings revealed a positive moderate relationship between research and development and the growth of the private company at (r= 0.621**). The study results also shows that diversification and growth of private companies had a positive moderate relationship at (r=0.589**). The study further illustrates that there is a statistical moderate positive relationship between mergers/acquisition and growth of the company with a moderate positive relationship (r=0.540). The researcher concluded that Movit Products Limited must undertake capital budgeting practices in form of research and development, diversification and mergers/acquisition so as to affect the growth of private companies positively. This can be achieved through implementation of new machinery, replacement of machinery, new plants, new products, and projects through company’s capitalization structure. The study shows that Movit Products Limited should comply with government rules and regulations in order to enhance growth of private companies.

Keywords: Research and Development, Diversification, Mergers or Acquisitions

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