Financial Management Practices and Performance of Small and Medium Entreprises: Evidence from Sekondi-Takoradi Metropolis, Ghana

Abstract

This study examined the influence of financial management practices on the performance of SMEs in Sekondi-Takoradi Metropolis. The study used the descriptive research design and adopted the sample size formula for finite population proposed by Krejcie and Morgan (1970) to select a representative sample of 383 from a total population of 115,577 SMEs in Sekondi-Takoradi Metropolis. Respondents constituted owners and/or managers of the selected SMEs in Sekondi-Takoradi Metropolis. Questionnaires were semi-structured and self-administered. The data collected were analysed using descriptive statistical tools such as frequencies, percentages, mean as well as inferential statistics specifically Pearson’s correlation coefficient of SPSS version 21. The findings revealed that, working capital management and profitability management are highly adopted by SMEs in Sekondi-Takoradi Metropolis as part of their financial management practices, as compared to asset and liabilities management and strategic financial management. Also, working capital management practices had a positive and significant relationship with the performance of SMEs. Lastly, financial management practices had a positive and significant relationship with the performance of SMEs in Sekondi-Takoradi Metropolis.