TRADE CREDIT AND INVESTMENT PERFORMANCE OF EXPORT ORIENTED COMPANIES IN RWANDA A CASE STUDY OF URWIBUTSO ENTERPRISE, GASHORA FARM AND NGALI HOLDING

Abstract

The general objective of this study was to examine the impact of the trade credit on the investment performance of export-oriented companies, moderated by tax relief in Rwanda, case of Urwibutso Enterprise, Gashora Farm Ltd, and Ngali Holding. This study had the following objectives, to assess the impact of the trade credit on the investment performance of export oriented companies in Rwanda, to determine the impact of tax relief on the investment performance of export oriented companies in Rwanda, to analyze the moderating effect of tax relief in the relationship between trade credit and investment performance of export oriented companies in Rwanda and to analyze the investment performance of export oriented companies in Rwanda. This Study was supported by the Trade-off Theory and Pecking Order Theory. This research was census research design, and the study population comprises 60 employees of selected EOC, sampled using convenience sampling technique. The researcher used primary data in this study. A closed end questionnaire was utilized. Descriptive research design and correlation analysis were utilized to assess the data and results generalized for the entire population, while multiple regression was used to test hypotheses. To compute and analyze the data in this study, available statistical product for service solution (SPSS 27) was used. The regression model 1 revealed that the variables Trade credit contribute to 60.1% to the investment performance of EOC. The ANOVA show that the model as a whole was significant at 5% level of significance. The F-calculated was 24.356 and was greater than the F-critical and the p-value was 0.002, which was less than the significance level (0.05). Regression model 2 revealed that the variable Tax relief contribute to 73.3% on investment performance in EOC. Findings in ANOVA, show that the overall model was significant since the computed F statistic of 27.340 and the calculated p-value of =0.001 is lower than the key p-value of =0.05 level of significance. The findings of the model 3 showed that Trade credit (β1=0.580, p=0.002) was a significant predictor of investment performance because significant value was less than .001; tax reliefs (β2=0.270, p=0.192) were not significant predictors of investment performance because the significant value was more than .005; nevertheless, the interaction between trade credit and tax reliefs was significant (β3=0.273,p=0.000), as indicated by a significant value less than .005. The results therefore shows that tax reliefs moderate the relationship between trade credit and investment performance. For Return on Equity, the results are almost the same since the p-value is 0.042 which is less the p-value of 0.05. This stresses that Ngali Holding is more profitable for its shareholders than Gashora Farm and Urwibutso enterprises. For Return on Assets, it has been found that the means are not equal since the p-value of 0.011 is less the p-alpha of 0.05. This shows that the ROE and ROA in selected export oriented companies are significant.