Abstract:
Small and Medium Enterprises are considered backbone of economic growth in all
countries and Small and Medium Scale Enterprises make up a large part of Sri
Lanka's economy, accounting for 80 percent of all businesses. Most SMEs have not
appointed financial managers to be in charge of financial management of the
company. Usually, the owner-managers with the assistance of the chief-accountant
control financial matters of the company. However, most owner-managers have no
formal training in management skills, especially financial management. So, currently,
financial management is one of the challenges of SMEs. Combination of both
insufficient knowledge of financial management and uncertainty of the business
environment often leads SMEs to serious problems regarding financial performances.
In this context, the research is carried to find the extent of financial management
practices of Small and Medium Enterprises in Anuradhapura district.
Extent of the financial management practices are measured using three variables as
financial reporting and analysis practices, working capital management practices and
financial planning and controlling practices. Data were collected using questionnaire
from 200 Small and Medium Enterprises Owners.
According to the descriptive analysis, usage level of financial management practices
is moderate level of the Small and Medium Enterprises in Anuradhapura district.
Based on results of the Independent sample t test, usage level of financial
management practices is not varying with the type of the scale, type of the industry,
age level of the business, gender of the owner, and level of profitability of the
business. But there are significant differences in usage level of financial management
practices among age level of the owner and education level of the owner. Therefore,
in order to improve the usage level of financial management practices researcher
recommends improving the knowledge regarding financial management to the
business owners and high involvement of the government to providing training
programs through each division in Anuradhapura district.
