FINANCIAL MANAGEMENT PRACTICES ON GROWTH OF BUSINESS ENTERPRISES IN MBINGA DISTRICT, TANZANIA

Asheri Mwidege; Christopher Nyigu

doi:10.36690/2674-5208-2024-3-32-44

Authors

Asheri Mwidege Mbeya University of Science and Technology https://orcid.org/0000-0001-6472-5332
Christopher Nyigu Mbeya University of Science and Technology

DOI:

https://doi.org/10.36690/2674-5208-2024-3-32-44

Keywords:

Financial Management practices, small and medium enterprises, working capital, business growth

Abstract

A robust financial management system forms the foundation for business growth and long-term survival. However, there is limited information on the financial management practices that contribute to business growth in the Mbinga district. This study examined financial management and working capital management practices. A semi quasi-experimental research design was employed, utilizing questionnaires distributed to a sample of 62 business owners. Descriptive statistics were analyzed using the SPSS package. The results indicated that 41.9% of business enterprises employed working capital management practices, while 24% used capital structure management practices. Financial management practices were found to enhance management efficiency with a mean score of 3.74, increase the availability of capital with a mean score of 3.61, and improve operational margins with a mean score of 3.56. The study concluded that financial management practices are crucial for business growth and recommended their implementation. The study also found that capital structure management practices were applied to a lesser extent, although businesses showed an understanding of balancing debt and equity for financial sustainability. These findings suggest that the effective implementation of financial management practices is crucial for the growth and performance of businesses in the district. The study concludes that the integration of sound financial management practices contributes to better financial decision-making, risk mitigation, and resource optimization, leading to business expansion and sustainability. From a policy perspective, the study recommends that regulators and stakeholders encourage firms to leverage debt financing due to its associated tax benefits and advantages for financial sustainability. Theoretically, the findings underscore the relevance of agency theory in understanding the dynamics between managers and shareholders, and the principle of optimal capital structure in maximizing firm value. These insights provide a foundation for future research and practical interventions aimed at improving financial management practices in similar contexts.

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Author Biographies

Asheri Mwidege, Mbeya University of Science and Technology

Ph.D. (Agricultural Economics), Dr., Director of Postgraduate Studies, Research and Publications, Department of Business Management, Mbeya University of Science and Technology, Mbeya

Christopher Nyigu, Mbeya University of Science and Technology

Undergraduate student, bachelor’s in business administration, Department of Business Management, Mbeya University of Science and Technology, Mbeya

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