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Bmgt 320: Research Methods Question Paper
Bmgt 320: Research Methods
Course:Bachelor Of Commerce
Institution: Kabarak University question papers
Exam Year:2012
KABARAK
UNIVERSITY
UNIVERSITY EXAMINATIONS
2012/2013 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF COMMERCE
BMGT 320: RESEARCH METHODS
DAY: FRIDAY
DATE: 14/12/2012
TIME: 9.00 – 11.00 A.M. STREAM: Y3S2
INSTRUCTIONS:
1. Answer question ONE and ANY other TWO questions.
2. Question ONE is compulsory and carries 30 marks.
3. All other questions carry 20 marks each.
Question 1
Read the case study below and answer the questions that follow.
The role of bank overdraft usage and cash flow problems in the prediction of
bankruptcy
INTRODUCTION
From the claims records in judicial courts (“Third of claims”, 1992), it appears that the
non-availability of cash is still the predominant cause of bankruptcy in all small businesses.
Research on possible contributory causes of bankruptcy therefore remains the utmost importance.
Friedman and Rosenman (1974) came to the conclusion that risk factors for bankruptcy
(such as poor credit control and debt collection) were predictors of fewer than half the cases of
bankruptcy. According to these authors, businesses that exceed their bank overdraft run greater
risk of becoming bankrupt.
During the eighties, the findings on the importance of bank overdraft usage as predictor
of bankruptcy were contradicted in several prominent investigations, and enthusiasm for this
topic waned. These investigations tended to consider bankruptcy in terms of bank overdraft usage
without taking other risk factors, such as cash flow problems into account.
Levy (1998) believes that, statistically, bank overdraft usage is a less important predictor
of bankruptcy than management skills, and that there is a mutually operative relationship between
bank overdraft usage and management skills in this regard. As a possible explanation of the data
they obtained in investigating the opinion of Levy above, Kreitler and Brunner (1997) suggest
that “a business where management skills such as co-ordination of enterprise functions is highly
developed ... tends more to make use of bank overdrafts as a means of controlling cash flow
problems”(p. 493).
There are various means by which management skills and cash flow problems might
combine with bank overdraft usage to give rise to bankruptcy. Accordingly, overextension of
bank overdraft need not represent a risk on its own; it can become a risk only if it is linked to
specific levels of other variables (Maticek, 1998). Thus, bank overdraft usage and cash flow
problems do not have to be played off against each other regarding their ability to predict
bankruptcy, because this ability to predict is in fact increased by viewing these factors jointly.
The purpose of the present research therefore was to investigate the role of bank overdraft
usage and cash flow problems in predicting bankruptcy status (bankrupt versus non-bankrupt).
METHOD
Subjects
The names and telephone numbers of small businesses that employed 20 to 40 employees that
had been declared bankrupt in the preceding five years were obtained from the registrar of
companies. The owners of small businesses in Nairobi were conducted by telephone to secure
their co-operation in completing the questionnaire. Only four refused to participate.
Appointments were made with 36 owners, during which they were given the questionnaires and
told how to complete them. A control group of an equal number of small business owners who
were prepared to participate in the project of corresponding sizes (number of employees) and
comparable business sectors (for example restaurants, second hand clothes sales, and so on) but
without any record of bankruptcy completed the questionnaire in the same manner.
The average size of the bankrupt group was 50 employees and that of the control group
was 49.
Procedure
Apart from the business owners having to indicate the size of the small business (number of
workers employed) as well as the business sector to which they belonged, they also had to
indicate the amount by which they exceeded their overdraft limit on overage per month. They
furthermore had to indicate on a four-point scale the extent to which they are/were prone to
having cash-flow problems by marking the letters F (completely false), f (more false that true), t
(more true than false) or T (completely true). T was scored 4 (four). Bankruptcy was scored 1
(one) and non-bankrupt 0 (zero).
RESULTS
The correlations between the predictor variables and bankruptcy-status (bankrupt/non-bankrupt)
are provided in the Table below.
Bank overdraft usage
Bankruptcy
Cash-flow problem
0.83
0.94
Bankruptcy status
0.45
Bank overdraft usage (reported amount by which bank overdrafts were exceeded) correlated
significantly high (r = 0.94) with bankruptcy status and also showed a significantly high positive
correlation of 0.83 with cash-flow problems. Cash-flow problems showed a correlation of 0.45
with bankruptcy status (bankrupt/non-bankrupt).
REFERENCES
Levy, H.J. (1998). The perspective importance of management skills, bank overdraft and
interaction effects for the genesis of bankruptcy. Management skills and small businesses,
9, 453–464.
Friedman, M., & Rosenman, R.H. (1974). Association of bank overdraft usage patterns with
increase in bankruptcy. Journal of the American Business Association, 44, 525–553.
Maticek, R. (1989). Synergetic effects of bank overdraft, cashflow problems and risk factors in
bank overdraft usage. Financial Business Skills, 34, 267–272.
Kreitler, S. & Brunner, D. (1997). The relation of bank overdraft to financial risk factors for
bankruptcy. Management Skills and Small Businesses, 12, 487–495.
a. In your own words, formulate the research hypothesis.
(2 marks)
b. What is the unit of analysis? Explain your answer.
(3 marks)
c. What type of sampling was used in the research? Explain your answer.
(3 marks)
d. Does the investigation involve an experimental research or a survey research design? Give
reasons for your answer.
(3 marks)
e. What type of measurement level is involved in the dependent and independent variables?
Explain your answer.
(4 marks)
f. Explain the data analysis method used in the case study.
(2 marks)
g. Briefly criticise the list of references.
(3 marks)
h. Write the discussion and conclusion of the case study. Pay particular attention to the
possibility of causal aspects in the study.
(10 marks)
Question 2
a. Indicate the similarity and the difference between cluster sampling and quota sampling.
(4 marks)
b. What considerations should a researcher bear in mind when formulating questions for a
research instrument?
(16 marks)
Question 3
a. Explain any FIVE response styles and indicate how a researcher can prevent them.
(15 marks)
b. Indicate any FIVE kinds of questions that a researcher can ask when conducting unstructured
In-depth interview.
(5 marks)
Question 4
a. Explain FIVE methods of theme identification when using qualitative data analysis.
(10 marks)
b. Explain the importance of literature review.
(10 marks)
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