The effect of financial management practices on the financial performance of small and medium enterprises in Wakiso District
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Date
2026-06-15
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Uganda Christian University
Abstract
The study aimed at examining the effect of financial management practices on the financial performance of small and medium enterprises (SMEs) in Wakiso district. It specifically focused on; examining the relationship between budgeting practices and financial performance of SMEs, establishing the relationship between working capital management and financial performance of SMEs, and exploring the relationship between financial record keeping and financial performance of SMEs in Wakiso district. The study was conducted using cross-sectional survey research design, where quantitative research approach was also used. During the data gathering process, simple random sampling method was used. A sample size of 133 SMEs located in Bweyogerere, Wakiso district was use although 120 of them responded to the questionnaires. The study found out that there is a significant relationship between financial management activities
such as budgeting, working capital management, and record keeping and the financial performance of small businesses operating in Wakiso district. Budgeting practices positively influence planning, cost control, and decision-making processes (r = .766**, p < .05). Working capital management practices have been found to improve business efficiency and liquidity (r = .792**, p < .05), while financial record keeping improves accountability and informed decision-making (r
= .785**, p < .05). Finally, the study recommended that small and medium enterprises operating in the district of Wakiso should adopt sound financial management by developing sound budgets, reviewing and revising their budgets, managing their working capital using efficient cash flow management
techniques, and collecting their receivables efficiently. Moreover, small and medium enterprises should develop sound financial policies as well as sound financial record keeping systems. These recommendations will result into improved financial performance.
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Undergraduate