Influence of Medium-Term Financing on Profitability of Supermarkets in Central Business District Nairobi City Kenya

Medium-term finances affect the profitability of supermarkets. Supermarkets have been struggling and experiencing financial uncertainty that has impacted their operations leading to bankruptcy in some of the supermarkets. The empirical studies have shown that the issue has not received attention from scholars in Kenya and especially for the supermarkets and that none of the studies have focused on medium-term financing and the profitability of supermarkets in the central business district of Nairobi city, thus the existence of a knowledge gap which need to be filled. Therefore, the study sought to fill the gap by assessing the effect of medium-term financing on the profitability of supermarkets in the central business district of Nairobi city Kenya. The study was guided by the theory of Modigliani and Miller. A cross-sectional survey and a descriptive research strategy were utilized in this study. The target population of this study was 18 supermarket branches in Nairobi's central business district Kenya. The study specifically targeted the 18 branch managers and 18 accountants of these supermarkets. The study adopted the census sampling technique. Questionnaires were used to collect primary data and secondary data from financial statements and yearbook reports of supermarkets from 2016 to 2018. Data were analyzed using correlation and regression models with the support of the Statistical Package for Social Sciences (SPSS). Descriptive and inferential statistics specifically, mean, standard deviation and trends analysis were conducted. Statistics were presented in tables and figures. The correlation outcomes revealed that mediumterm financing and profitability were positively and significantly correlated (r = 0.579, Sig < 0.05). Regression results showed that medium-term financing significantly influenced the profitability of supermarkets in the central business district of Nairobi city Kenya (β=0.650; Sig < 0.05). The study concluded that medium-term financing had a significant and positive relationship with the profitability of supermarkets in the central business district of Nairobi city Kenya. The study recommends that supermarket managers should strive to maintain an appropriate medium-term funding level to help increase profits and growth of supermarkets, therefore supermarkets should be averagely leveraged