IMPACT OF FIRM’S AGE AND SIZE ON IT’S FINANCIAL PERFORMANCE: A CASE STUDY OF RESTAURANTS ON ERITREA-ASMARA CITY

Abstract

This study had the objective of assessing the impact of firm’s age and size on firm’s financial performance. The effects of firm characteristics on firm performance have gained attention in recent theoretical and empirical work. Firm size and age are a construct of scholarly interest since it traditionally has much explanatory power, and an understanding of its importance can be vital for managers who operate in this competitive environment. This research was carried out using an explanatory and descriptive research design. The target population of this study was restaurants located in Asmara city. From this all population 51 restaurants were included in the sample. Firm size was measured using total assets and total number of employees. Financial performance was measured using profitability. Data which was collected was analyzed using SPSS software. Analyzed data was presented using tables and figures. Study findings indicate that there is a big impact of the firm characteristics on firm performance. The study recommended that in order for restaurants to increase and make stronger their financial performance they need to enlarge their size through equipping latest and more asset and at the same time hiring employees with different skills. The study further recommends that for restaurants to remain profitable they should have good portfolio management which will help in generating profit and in making decisions about investment plans.