International Research Journal of Accounting and Taxation (IRJAT) ISSN: 1873-2100,  Vol. 1 (1), pp. 001-015, November, 2020.© Advanced Scholars Journals

Full length Research paper

Effect of financial management practices on the growth of selected small and medium enterprises in Eldoret town

^*1Wasonga OW, Omillo FO², Kimutai G³ and Omwenga MO⁴

^*1MBA Student, Kisii University

²Department of Business and Management Studies, University of Eldoret

^3&4School of Business and Economics, Kisii University

Accepted  20^th November, 2020.

Abstract

The study sought to establish the effect of financial management practices on the growth of enterprises in Eldoret town. The following objectives were used; to determine the effect of financial budgeting on the growth of small and medium enterprises in Eldoret town, and to investigate the effect of working capital management on the growth of small and medium enterprises in Eldoret town. The study was guided by the pecking order theory and trade-off theory. The study applied explanatory research design. Data was collected through open and close ended questionnaire which was then analyzed by multiple line regression statistics. The study used census of 1139 SMEs. The study found that the financial budget management practices enabled the business operators to effectively plan, borrow efficiently and control the businesses expenditures. Additionally, most business enterprises that adopted proper working capital management practices ended up with sufficient cash flows to effectively meet their daily needs. The study recommended that formulation of policies and regulatory framework should be used to enhance growth of SMEs.

Key words: financial management practices, working capital management, financial budgeting, growth of small and medium business in Eldoret.