Effects of Budgeting on Financial Performance: A Study of Selected Manufacturing Firms in Kinondoni District Dar es salaam Tanzania

This study intended to examine the effects of budgeting on financial performance of manufacturing firms in Kinondoni district Dar es Salaam Tanzania. A descriptive research design was adopted. A sample of 75 respondents from selected manufacturing firms was employed. Purposive sampling was used to select seventy five (75) respondents (managerial staffs) from selected manufacturing firms. Self-administered questionnaire composed of closed ended questions, open-ended questions and five point likert scale questions were used to collect data from seventy five (75) respondents. Data were analyzed descriptively using SPSS version 20. The findings indicated that more formalized budgeting planning leads to higher sales revenues. Secondly; the results revealed that formalized budgetary control leads to a higher growth of profit of a firm.It was also found that the formal budgeting planning and the formal budgetary control show different patterns in terms of their effect on financial performance. The formal budgeting planning has a stronger impact on the growth of sales of manufacturing firms, compared to the formal budgetary control. However; its impact on the growth of profit becomes very weak compared to formal budgetary control. It was recommended that manufacturing firms need to establish a strong link between the planning and control processes and the budget process. Companies need to adopt a medium term plan to define priorities for their daily tasks