A Study Of Financial Management Practices In Micro And Small Scale Enterprises: A Case At Hawassa City Administration, Sidama, Ethiopia

Abstract

This study investigated financial management practices of micro and small-scale enterprise in Hawassa city. For achieving the intended objective, the study stretched to the five sub sectors of the enterprises namely manufacturing, construction, services, trade, urban agriculture. The information gathered through questionnaire from a sample of 92 operators. Stratified random sampling method was used to draw a representative sample. Statistical analysis utilized was descriptive statistics. The result of the study revealed that about half of MSEs have sound practices of financial planning, analysis and control and accounting information, majority of them do not have a practice of sales records. Regarding purchase record and financial reporting 72% said that they have purchase record and about 18.5% of MSEs do not prepare financial report. In general study also indicated that a greater number of MSEs had a growth rate that could be considered low (score 1and 2 on the scale) as compared to the number of MSEs whose growth rate could be considered high (score 4 and 5on the scale). Recommendations to improve financial management practices include training of the owners of micro and small-enterprises.