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.