The Impact of Financial Management Practice on Micro and Small Enterprise Growth: The case of Ambo Town

Abstract

This study was conducted on The Impact of Financial Management Practices on MSEs Growth in case of Ambo Town, West Shoa, Zone Oromia Regional State, Ethiopia which aimed to investigate the impact of financial management on MSES growth. The findings from this study may benefit the business owners and government itself by reduction of poverty. The research design was combine explanatory and descriptive type of research design. The population for this study was MSEs found in Ambo town in different sectors (livestock, manufacturing, construction, service providers, trade, minerals, and urban agriculture) which account about 471.from these population about 333 sample size was calculated using Yemane formula and304 data returned and used for data analysis. The sampling technique used for this study was purposive and random sampling. As the source of information the primary data was used and collected through structured questionnaire. The independent variables of the study were financial reporting and analysis, account receivable, inventory management, potential investment, financing decision, accounting information systems and the dependent variable is financial growth of MSEs growth. For data was analyzed using both descriptive and inferential statistics. The descriptive and findings of were statistically significant except is not significant. Based on the result the study concluded that for variables there was poor financial management practice for the growth of MSEs in ambo town which resulted from low financial reporting and analysis, account receivable, inventory management, potential investment, financing decision, accounting information systems in Ambo Town. Therefore, this study recommends the adoption of financial management practice which include both the managers/owners of the MSEs and government and other regulatory bodies to create favorable policies on the implementation of financial management practices for the MSEs growth.