Effect of Financial Management Practices on the Business Efficiency of Small And Medium Enterprises in Nigeria (original) (raw)

The purpose of this study was to determine the effects of financial management practice on the business efficiency of small and medium enterprises in in Nigeria. This involved modern financial management practices. Small and Medium Enterprises play a very significant role in the process of industrialisation and sustenance of economic growth encouragement of entrepreneurship, employment generation, reduction of poverty and contribution to gross domestic product (GDP) in many countries, Nigeria inclusive. They perform that vital role through innovation and production of various goods and services which empower the process of sourcing such funds as well as the effective utilization and efficient management of the funds constitute major challenges of the involvement of well trained professionals accountants to attract at the main objectives of this research was to establish relationship between financial management practices and the business efficiency of small and medium enterprises in Kaduna-Nigeria. The independent variables of the study are working capital management, investment decision, financial decisions, accounting information system and financial reporting and analysis. A descriptive research design was used to analyse data. Advanced statistical analysis was conducted using both inferential and descriptive statistical analysis and regression analysis model. Sample of 230 questionnaires were administered. The study was conducted in Kaduna-Nigeria being a former headquarters of Northern Nigeria is a cosmopolitan area and have numerous small and medium enterprises. The findings revealed that, financial management practices have a significant influence on the business efficiency small and medium enterprises in Kaduna-Nigeria i.e., is therefore, recommended that the government in Nigeria need to introduce new policies through agencies that will encourage SMEs in Nigeria to live and train professional financial experts in their firms. The research also recommends that SMEs should always use the modern financial techniques in keeping financial records. xxi Operational Definition of Terms Accounting Information System: An accounting information system (AIS) is a system of collection, storage and processing of financial and accounting data that is use by decision makers. (Turyahebwa, 2013). Business Efficiency: Is a situation in which an organisation maximizes benefit and profit, while minimizing effort and expenditure. For the purpose of this study, business efficiency is define in terms of profitability growth. Profitability refers to the rate of return on company's investment. (Ismail, 2010). Financial Management: This refers to the decisions relating to investment, financing information system and financial reporting analysis. (Asuquo, 2103). Financing: Financing decisions are decisions concerned with the method that are used to raise funds to meet the firms investment and operating needs. (Asuqua, 2012). Growth: refers to percentage increase in sales and percentage increase in market share. (CBN, 2012). Investment: This involves the decision of allocation of capital or commitment of funds to long term assets that would yield benefits in the future. (Effiong, 2013). Working Capital Management: This involves the relationship between a firm short term assets and its short term liabilities. (Eljelly, 2004).