IMPROVING FINANCIAL MANAGEMENT PRACTICES OF SMALL SCALE ENTERPRISES FOR INCREASED PROFITABILITY IN NIGERSTATE, NIGERIA

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IMPROVING FINANCIAL MANAGEMENT PRACTICES OF SMALL SCALE ENTERPRISES FOR INCREASED PROFITABILITY IN NIGER STATE, NIGERIA

TABLE OF CONTENTS

TITLE PAGE                                                                                                                         i

APPROVAL PAGE                                                                                                   ii

CERTIFICATION                                                                                                     iii

DEDICATION                                                                                                           iv

ACKNOWLEDGEMENTS                                                                                       v

TABLE OF CONTENTS                                                                                           vi

LIST OF TABLES                                                                                                     ix

LIST OF FIGURES                                                                                                   xi

ABSTRACT                                                                                                               xii

 

CHAPTER ONE: INTRODUCTION

Background of the Study                                                                                                 1

Statement of the Problem                                                                                     14

Purpose of the Study                                                                                            16

Significance of the Study                                                                                     16

Research Questions                                                                                               18

Hypotheses                                                                                                           18

Scope of the Study                                                                                               20

 

CHAPTER TWO: REVIEW OF RELATED LITERATURE

Conceptual Framework                                                                                           21

  • Small Scale Enterprises 21
  • Profitability of Small Scale Enterprises 25
  • Financial Management Practices of Small Scale Enterprises 26
  • Financial Planning Practices 30
  • Financial Control Procedures 34
  • Financial Record Keeping Practices 41
  • Project Financing Practices 45
  • Financial Investment Practices 54
  • Financial Reporting Practices 59

 

Theoretical Framework                                                                                            67

  • Agency Theory 67
  • Pecking Order Theory 69
  • Separation Theorem 70

Related Empirical Studies                                                                                        70

Summary of Literature Reviewed                                                                           75

 

CHAPTER THREE: METHODOLOGY

Design of the Study                                                                                              77

Area of the Study                                                                                                 77

Population for the Study                                                                                      78

Sample and Sampling Technique                                                                          79

Instrument for Data Collection                                                                             79

Validation of the Instrument                                                                                80

Reliability of the Instrument                                                                                 81

Method of Data Collection                                                                                   81

Method of Data Analysis                                                                                     82

 

CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA

Research Question One                                                                                        83

Hypothesis One                                                                                                    85

Research Question Two                                                                                        87

Hypothesis Two                                                                                                    89

Research Question Three                                                                                      91

Hypothesis Three                                                                                                  93

Research Question Four                                                                                        96

Hypothesis Four                                                                                                    97

Research Question Five                                                                                        99

Hypothesis Five                                                                                                    100

Research Question Six                                                                                          102

Hypothesis Six                                                                                                      103

Findings                                                                                                                104

Discussion of Findings                                                                                         108

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

Re-statement of the Problem                                                                                117

Summary of Procedures Used                                                                              119

Summary of Findings                                                                                        120

Conclusion                                                                                                            121

Implications of Findings                                                                                       121

Recommendations                                                                                                122

Limitations of the Study                                                                                       123

Suggestions for Further Research                                                                         123

References                                                                                                                 124

Appendices

A: Population/Sample Distribution of Accounting Lecturers and

Professional Accountants                                                                               132

B: Letter to Respondents                                                                                    133

C: Questionnaire                                                                                                  134

D: Letter to Validators                                                                                        138

E:   Summary of Suggestions made by Validators and Corrections

Effected                                                                                                         139

F:   SPSS Output on Crunbach Alpha Reliability Coefficient of the

Instrument                                                                                                       140

G: Result of the Analysis                                                                                     143

 

LIST OF TABLES

Table                                                                                                                        Pages

1:         Mean Ratings of Respondents on Ways of Improving Financial Planning

Practices of Small Scale Enterprises for Increased Profitability.                    83

 

2:         ANOVA Analysis of Mean Ratings of the Respondents on the Ways

of Improving Financial Planning Practices of Small Scale

Enterprises for Increased Profitability.                                                           85

 

3:         Mean Ratings of Respondents on Ways of Improving Financial Control

Procedures of Small Scale Enterprises for Increased Profitability.                87

 

4:         ANOVA Analysis of Mean Ratings of the Respondents on the Ways of

Improving Financial Control Procedures of Small Scale Enterprises

for Increased Profitability.                                                                              89

 

5:         Mean Ratings of Respondents on Ways of Improving Financial Records

Keeping Practices of Small Scale Enterprises for Increased Profitability.     91

 

6a:       ANOVA Analysis of Mean Ratings of the Respondents on the

Ways of Improving Financial Records Keeping Practices of Small Scale

Enterprises for Increased Profitability.                                                           93

 

6b:       Scheffe’s Test of Mean Ratings of the Respondents on Ways of

Improving Financial Record Keeping Practices of Small Scale

Enterprises for Increased Profitability.                                                           94

 

7:         Mean Ratings of Respondents on Ways of Improving Project Financing

Practices of Small Scale Enterprises for Increased Profitability.                    96

 

8:         ANOVA Analysis of Mean Ratings of the Respondents on the Ways of

Improving Project Financing Practices of Small Scale

Enterprises for Increased Profitability.                                                           97

 

9:         Mean Ratings of Respondents on Ways of Improving Financial Investment

Decisions Practices of Small Scale Enterprises for Increased Profitability.   99

 

10a:     ANOVA Analysis of Mean Ratings of the Respondent on Ways

of Improving Financial Investment Decisions Practices

of Small Scale Enterprises for Increased Profitability.                                   100

 

10b:     Scheffe’s test of Mean Ratings of the Respondents on Ways of Improving

Financial Investment Decisions Practices of Small Scale Enterprises

for Increased Profitability.                                                                              101

 

11:       Mean Ratings of Respondents on Ways of Improving Financial Reporting

Practices of Small Scale Enterprises for Increased Profitability.                    102

12:       ANOVA Analysis of Mean Ratings of the Respondents on Ways of

Improving Financial Reporting Practices of Small Scale Enterprises

for Increased Profitability.                                                                              103

 

LIST OF FIGURES

Figure  1: Schema of the Conceptual Framework                                                       66

Abstract

The main purpose of this study was to determine ways of improving financial management practices of Small Scale Enterprises (SSEs) for increased profitability in Niger State, Nigeria. Six purposes and six research questions were raised for the study. A Descriptive survey design was adopted for the study. The population for the study was 205 respondents, made up of 8 university accounting lecturers, 54 polytechnic accounting lecturers and 143 professional accountants in Niger State. The entire population of 205 was studied because it was of a manageable size. A structured questionnaire developed by the researcher and titled, Financial Management Practices Improvement Questionnaire (FMPIQ) was used for data collection. The questionnaire was face-validated by five experts; three from the Department of Business Education, University of Nigeria, Nsukka; one from Department of Accounting, Ibrahim Badamasi Babangida University, Lapai, Niger State and one from Department of Entrepreneurship and Business studies, Federal University of Technology, Minna, Niger State. To determine the internal consistency of the questionnaire items, 30 copies of the questionnaire were administered to 30 respondents selected from university accounting lecturers, polytechnic accounting lecturers and professional accountants working in universities and polytechnics in Kogi State. The reliability coefficients obtained using Crunbach Alpha reliability method were .83, .82, .88, .72, .73, .89 for the six clusters of the questionnaire and .83 for the whole instrument. The instrument was administered through personal contact by the researcher with the help of 10 research assistants. Out of the 205 copies of the questionnaire administered, 197 were retrieved and analysed for the study. The data collected were analyzed, using mean and standard deviation to answer the six research questions while analysis of variance (ANOVA) statistic was used to test the six null hypotheses at 0.05 level of significance. The findings of the study included 12 ways of improving financial planning practices of Small Scale Enterprises for increased profitability and 10 ways of improving financial records keeping practices of Small Scale Enterprises for increased profitability in Niger State. It was recommended that, management of Small Scale Enterprises should adopt the ways of improving the financial management practices of Small Scale Enterprises as identified by the study for increased profitability in Niger State, and that government in conjunction with the relevant agencies should carry out enlightenment campaigns on the need for SSE operators to adopt appropriate financial management practices found by the study for increased profitability in Niger State, Nigeria.

CHAPTER ONE

INTRODUCTION

Background of the Study

Small Scale Enterprises (SSEs) play an important role in the economic growth and development of nations. SSEs play critical economic roles such as employment generation, revenue generation to government, provision of goods and services, serving as breeching ground for entrepreneurs, serving as training ground for local skills, reducing rural-urban migration and contribute meaningfully to the benefit of their owners and the economies of their host countries. The survival and profitability of SSEs is important to the economy because certain services are better and more efficiently provided at the level of these businesses. Their profitability can be achievable and determined through effective and efficient financial management practices by those saddled with the responsibility to oversee the operations of the SSEs. Agyei-Mensah (2012) stated that SSEs play critical roles in providing job opportunities, nurturing a culture of entrepreneurship and opening new business opportunities.

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