Financial management and sustainability of selected business enterprises in Kampala Central Business District
Loading...
Date
2026-04-17
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Uganda Christian University
Abstract
This study aimed to examine how financial management practices influence the SMEs performance
operating in Kampala Central Business District, Uganda. The study followed three main objectives: to
analyze the effect of financial reporting on SME performance, to assess how working capital
management affects performance, and to evaluate the role of budgeting in improving SME outcomes.
The research adopted both survey and descriptive research designs in order to clearly explain the study
variables. Descriptive surveys were particularly useful in identifying relationships between variables
and providing a clear quantitative description of the situation, while also observing behaviors. The
study mainly focused on quantitative data analysis. The results showed that financial reporting
practices among SMEs were fairly satisfactory, with an average score of 3.5. Working capital
management was rated slightly higher, with a mean of 3.69, while budgeting also showed a satisfactory
level with a mean of 3.44. Overall, the profitability of SMEs was moderate, reflected by a mean score
of 3.4. Further analysis revealed that financial reporting has a significant effect on SME performance
(R² = 0.153, p = 0.000), meaning it contributes positively to business outcomes. Similarly, working
capital management was found to significantly influence performance (R² = 0.234, p = 0.000),
indicating its strong role in ensuring business success. Budgeting showed the highest impact among the
three variables (R² = 0.286, p = 0.000), confirming that it plays a major role in improving SME
performance in Kampala.
From these findings, the researcher concluded that proper financial reporting is essential for enhancing
SME performance, especially since it relates closely to managing the cash conversion cycle. The study
also noted that SMEs that maintain a good balance between components of working capital—such as
cash, receivables, inventory, and payables—tend to perform better. In addition, budgeting was found to
be very important, particularly when businesses seek financial support from banks, as lenders often
require financial projections before issuing loans. Budgeting also helps businesses track their progress
toward achieving set goals. Based on the results, the study recommended that SME owners should
establish strong systems for monitoring financial transactions, ensuring that all payments are properly
recorded and tracked to improve financial efficiency and reduce errors. It also suggested that business
owners and managers should adopt effective working capital management practices, such as using
flexible and efficient methods of collecting funds, to improve performance. Overall, SMEs are
encouraged to carefully implement financial management in order to enhance profitability, growth, and
market share. However, since these practices can be time-consuming and require resources, they
should be applied properly and consistently to achieve the desired financial goals.
Description
Undergraduate