Assessment of Financial Management Practices: A Case Study on Small Businesses in Sokoru District, Ethiopia

Abstract

The study aims to explore the financial management practices of small businesses in Sokoru District, Ethiopia to those components namely, working capital management, financing, investment, financial reporting, financial planning, analysis, and control, and accounting information systems. To achieve the stated objectives of the study the primary data were obtained from owners’ of small businesses and trade and industry office of Sokoru District. Both stratified and simple random sampling methods were used to select sample for the study. The study found that the financial management practices of small businesses are very weak – especially in the areas of financial planning, analysis, and control working capital management, and investment decision. The study also recommended that it is advisable that the owners of small businesses avail themselves with various training programs; better to engaged in financial planning, analysis, and control in order to compare their financial plan with performances; and also maintain professional accountants so as keep complete accounting records.

Keywords: Financial Management Practices, Small Businesses