We present a rigorous theoretical basis of the kinetic method, commonly used for thermochemical determinations in mass spectrometry, based on finite heat bath theory (FHBT) developed by Klots. A simple analytical expression for the branching ratio is derived from FHBT formalism. This expression simplifies td the expression given by the absolute reaction rate theory (1) for very large clusters or (2) for reactions having a negligible kinetic shift. The reacting population is described by two different temperatures rather than by the "effective" temperature as suggested previously. Simulations performed using both RRKM and FHBT revealed that the kinetic plots are slightly nonlinear. The observed curvature is related to the changes in the transition state temperature as a function of the critical energy for fragmentation. The curvature of the plots decreases for larger clusters. We show that the "effective" temperature closely resembles the average value of the transition state temperature. This allows us to assign a new definition of the effective temperature and predict its properties. The results of simulations confirm that the extended version of the kinetic method introduced by Fenselau and co-workers provides accurate relative energetics for competitive reactions for both small and large ions. However, accurate thermochemical information can be obtained from the kinetic method only if reactions under investigation have negligible reverse activation energies. A new approach for extracting relative fragmentation energetics and entropy differences for two competing reactions is proposed. This approach requires a measurement of kinetic energy release distributions (KERDs) for the two fragmentation channels; the relative energetics and dynamics can be extracted from a single measurement.