Financial Management Practices And Financial Performance Of Small And Medium Enterprises In Port Harcourt
Bright Ajinwo
Rivers State University
Orlu Gift Ndaburoma
Department of Accountancy,Rivers State University, Port Harcourt
Keywords: Financial management, financial performance, capital budgeting, return on capital employed, management
Abstract
ABSTRACT
The study examined the effects of financial management practices and financial performance of small and medium scale enterprises in Port Harcourt. The study adopted survey research design. Working capital management and capital budgeting are the dimensions of financial management practices while Return on Capital Employed was used to measure financial performance. The population of this study consist of 1225 registered small and medium enterprises in Port Harcourt. Sample size was determined using Taro Yemen. Purposive sampling technique was used to select the respondents at random. Structured questionnaire was used for data collection. The study made used of frequencies, simple percentages and mean score to analyse personal data of the respondents and other questionnaire items, while Pearson Product Moment Correlation was used to test the hypotheses formulated at 5% level of significance. The study found that: working capital management has a positive and significant relationship with return on capital employed of small and medium scale enterprises in Port Harcourt, capital budgeting has a positive and significant relationship with return on capital employed of small and medium scale enterprises in Port Harcourt. The study concluded that financial performance of small and medium scale enterprises in Port Harcourt has positively and significantly improved by financial management practices. The study recommended among others that small and medium scale enterprises should embrace financial literacy, financial information and financial management skills to effect optimal performance.