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Effects Of Financial Management Practices On The Business Performance Of Small And Medium Enterprises In Kampala District

Namataka Shamina, Mwesigwa Henry


Abstract

The study sought to assess the effect of financial management practices on performance of small and medium enterprises in Kampala district, Uganda. It was guided by three specific objectives, which included; to determine the effect of financial reporting on performance of small and medium enterprises in Kampala district, to establish the effect of working capital management on performance of small and medium enterprises in Kampala district and to establish the effect of budgeting on performance of small and medium enterprises in Kampala district. This research employed survey and descriptive research design to describe the variables. Descriptive surveys were used to discover causal relationships (descriptive correlation) to provide precise quantitative description and to observe behavior. The data gathered was collected, coded into the computer and statistically treated using the Statistical Package for Social Sciences (SPSS). Quantitative data analysis was employed in this research study. The findings revealed that financial reporting among SMEs was rated satisfactory, and this is indicated by the overall mean of 3.5, implying that the owners of SMEs; working Capital Management was rated satisfactory with the overall mean of 3.69, as well budgeting among SMEs was rated satisfactory, and this was indicated by the overall mean of 3.44 and profitability was moderate, and this is indicated by the overall mean of 3.4 among SMEs. Moreover, financial reporting significantly affects performance of SMEs this led to a significant effect of Financial reporting on performance of SMEs; working capital management significantly affects the performance of thus Working capital management had a significant effect on performance of small and medium scale enterprise and finally, budgeting significantly affects performance of SMEs therefore, budgeting has a significant effect on performance of small and medium scale enterprise in Kampala district. The researcher concluded that effective financial reporting is an important factor in determining the level of performance of SMEs since financial reporting is based on cash conversion cycle and still considered as an important factor in enhancing the performance of SMEs, in order to increase the financial performance, SMEs in Kampala District have tried to maintain an optimal balance between each of the working capital components such as cash receivables, inventory and payables and finally, as a way of increasing on the level of performance, small and medium enterprises in Kampala District have always considered budgeting as an important factor when obtaining bank credit as banks commonly require a projection of future operations and cash flows to support loans, this has also led to the improvement in performance due to checking of progress towards the objectives of the enterprise. The researcher recommended that; small and medium business owners should develop a good system to monitor finance payments, record and track all the finance payments so that there is effectiveness in payment of cash and ensure to cover loopholes in the system to enhance financial performance. Small and medium enterprise business owners and managers should develop an effective working capital management Received: 19.06.2024 Accepted: 23.06.2024 Published on: 30.06.2024 Corresponding: Author: research@miu.ac.ug/publications 442 Metropolitan Journal Of Business & Economics ISSN: 1813-4238 Vol. 3 Issue 6, June2024, Pages: 442-469 system for example alternative ways of collecting funds from which makes finance collection easy and flexible to boost performance.

Keywords

Financial Management Practices Business Performance Small And Medium Enterprises
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Namataka Shamina & Mwesigwa Henry (2024). Effects Of Financial Management Practices On The Business Performance Of Small And Medium Enterprises In Kampala District. Metropolitan Journal of Academic Multidisciplinary Research, 3(6). https://journals.miu.ac.ug/pages/article.php?article_id=1778

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