Debt Financing and Financial Sustainability; Effect of Trade Credit Financing on Private Secondary Schools in Uasin Gishu County
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ArticleFinancial sustainability is key to the survival of an organization because it leads to continuity, effectiveness and efficiency of an organization. Private secondary schools is in an increasing struggle to expand in terms of number of students and every shilling they bring while they compete with public institutions for survival in tandem with provision of high quality education. The aim of the study was to establish the effect of debt financing on the financial sustainability of private secondary schools in Uasin Gishu County. The study looked at the effect trade credit on the financial sustainability of private secondary schools. This study adopted a descriptive survey research design. The target population of the study was 156 respondents composed of 52 school directors, 52 principals and 52 accountants of private secondary schools in Uasin Gishu County. The sample size formula for this study was based on Yamane’s formula where sample sizes of 112 respondents were selected by use of stratified random sampling techniques. A pilot study on selected respondents from randomly selected 6 private schools in Nandi County was done to test for validity and reliability of the research instruments. Content validity was used as a validity test while reliability was tested using Cronbach's alpha coefficient. Descriptive statistics including mean, percentages and frequencies and inferential statistics was employed to analyse the data. In addition, inferential statistics that is correlation coefficient was used to make inferences of the population using data drawn from the population whereas descriptive statistics was used to summarize data from the population. The study findings indicated that, trade credit (β = 0.263; p < 0.05), was significant factors that influence financial sustainability of private secondary schools in Uasin Gishu County. The study recommends that that the management of private secondary schools in need to employ optimal levels of debt since interest payments on debt can affect the schools cash flows, should effectively manage their administrative expenses to enhance their schools’ performance in financial terms and need to devise effective strategies to enhance their revenue generation since revenue is vital towards meeting the obligations of the private schools. The study is of great benefit to the Ministry of Education and management of private secondary schools. It will form a reference point in further research in the area of private institutions and its financial sustainability. This study will be an eye opener to researchers and stakeholders on the importance of debt financing on financial sustainability of private educational institutions.
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