Financial Management Practices And Profitability of Small Scale Enterprises Uganda, A Case of Kabale Municipality

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Abstract The purpose of the study was to examine how financial Management Practices affect profitability amongst small scale enterprises. The study adopted descriptive and correlational research designs. The study used a multi regression analysis that determined the linear effect of financial management practices on profitability. A multi regression model also provided a basis for hypothesis testing. The findings established a significant influence of financial management practices on profitability. Evidence showed that working capital and cash management practices had strong associations with profitability. This study also established a triad-factor that limits profitability, characterizing operational costs, microeconomic, and personal characteristics. This study provided empirical evidence on the contribution of the innovation theory and managerial efficiency theory of profits to management of operational and production costs in business. The study recommends that Small business firms should ensure sound financial management practices in order to experience positive changes in their profitability levels. Small scale enterprise owners must pay a lot of attention to their working capital dynamics, cash management which highly affect their profitability levels. Small scale entrepreneurs should hire professionals and experts in financial management.

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