Abstract:
ABSTRACT
Despite the significance and involvement of small and medium enterprise to the
economy, several empirical studies indicate that most SMEs fail to grow with
some folding up within the first few years of their operation. This study
achieved the objectives of assessing the financial performance of SMEs and the
mediating role of financial management practice on the effect of financial
literacy on financial performance. The study discussed the financial
management practice theory, resource-based theory, the principle of financial
literacy and financial performance evaluation as part of the theoretical and
conceptual analysis. The study adopted the descriptive statistics and correlation
analysis in a quantitative approach. In all, 327 SMEs in the Sekondi-Takoradi
Metropolis were included in the study and the research employed a
questionnaire to elicit the required data for the study. The study employed
frequency tables, structural equation modelling and correlation analysis to
examine financial literacy and financial performance with the mediating role of
financial management practice between SMEs in Sekondi-Takoradi Metropolis.
The study concluded that financial management practices mediate financial
literacy and financial performance nexus. Based on the discoveries of the
research, we can conclude that sampled SMEs in the metropolis were
performing well financially and financial management practices mediated
financial literacy. Moreover, the study recommended that, policies should be
directed ensuring that first, managers of SMEs are trained to become financial
literate. Again, regular studies should be conducted for SMEs manager on how
to undertake financial management practices.
