THE IMPACT OF FINANCIAL LITERACY ON THE PROFITABILITY OF SMALL SCALE ENTERPRISES IN CALABAR MUNICIPALITY, CROSS RIVER STATE
ABSTRACT
The focus of this research is on the
impact of financial literacy on the profitability of some small scale
enterprises in Calabar Municipality, Cross River State. An enquiry into their
level of adoption of financial literacy was also studied. A review of related
literatures was carried out to examine the extent of work done in the field. A
carefully structured questionnaire was used to collected data on the level of
adoption of financial literacy and also a financial literacy test. Stratified
random sampling was adopted to divide the small scale enterprises into ten (10)
strata, thereafter random sampling technique was employed. A sample of one
hundred and fifty (150) respondents was used to carry out the study, which
encompasses the different strata. One way analysis of variance (ANOVA) and
Dependent T-test at 5% level of significance was used in the analysis of the
research data. The result shows that the level of adoption of financial
literacy by small scale enterprises in Calabar Municipality is low and that
utilization of accounting records significantly influences their profitability.
Thus, conclusion, recommendations and suggestions for further studies were
proffered.
INTRODUCTION
1.1
Background
of the study
Like little drops of water
that forms a mighty ocean, the littleness of small scale businesses from the
cradle has been the bedrock of industrialization in developing countries of the
world. Globally, small scale enterprises have contributed enormously in
improving the standard of living of the people by providing jobs to relieve the
society of social embarrassment, stimulating indigenous entrepreneurship and
utilizing scarce resources.
Presently, as part of
the Millennium Development Goals (MDGs), effort is being made to reduce poverty
rate in developing countries. Effort is also being made to reduce the reliance
of people on government and so-called ‘white collar jobs’. These are achieved
through the growth and development of small scale enterprises (Eneh, 2007).
Furthermore, small scale enterprises play important roles in the economic
growth and development of every nation. They are a veritable vehicle for the
achievement of national macro-economic objectives in terms of employment
generation at low investment cost and enhancement of apprenticeship training.
Financial literacy as
the name implies occupies a centre-stage in the quest to achieve an overall
degree of success in an organization, (Bernheim, 2008). It also enhances to a
reasonable degree, a business goal of financial profit. Thus, financial
literacy (or lake thereof) has played a key role in the success and failure of
our nations business for the past centuries. Companies and businesses have
therefore been charged with ensuring that adequate and proper books of accounts
are kept so as to ensure reliability of their financial statements. This will
in the long run help improve their level of profitability.
Furthermore, profit can
analogously be viewed as the life-blood of a business and hence the accounting
bases, concepts and principles adopted ought to capture and report all the
relevant information to ensure reliability in its measurement (Nelson and
Onias, 2011). Also Enikanselu and Oyende (2009) made it clear that no business
can run effectively without being financially literate and also having one form
of accounting records or the other. It
can therefore be deduced that appropriate financial literacy is important for a
successful management of any business, whether big or small.
Consequently, suffice
is to say that it is crucial that financial literacy be encouraged among small
scale enterprises so as to enable them be able to supply complete and relevant
financial information needed to improve on decisions made by them, and to also
enhance their profitability. This research study therefore examines financial
literacy and its impact on profitability of small scale enterprises.
1.2
Statement
of the problem
Since the present
civilian administration came into being in 1999, it has put in place policy
measures, schemes and support schemes to develop the small scale enterprise
sub-sector and to increase its performance.
In
today’s Nigeria, small scale enterprises have not performed creditably well and
they have not played expected significant role in spite of the fact that they
have been regarded as the bulwark for employment generation and technological
development.
First
and foremost is the problem associated with small scale enterprises lack of
financial literacy which is evident in their inability to keep complete
accounting records. This invariably has resulted into a situation where SSEs
operating in the state cannot capture adequately the business profit. This is
because in the process of calculating profit, financial data are assembled in a
way that can help make informed judgment and take decisions about the business.
These financial data can not be assembled without adequate financial literacy.
This problem has ultimately affected the profitability of small scale
businesses.
In
addition to the above is SSEs lack of awareness of financial risk and
opportunities, reckless expenditure, use of business funds for personal
transactions, limited access to bank credit facilities and insurance policies.
These and many can be addressed by being financially literate.
Henceforth,
the researcher believes that these inherent problems could be attributed to the
neglect of financial literacy by small scale enterprises in Cross River State.
A Research proposal for the impact of financial literacy on the profitability of small scale enterprises in calabar municipality, cross river state:
Reviews: A Review on the impact of financial literacy on the profitability of small scale enterprises in calabar municipality, cross river state, impact, financial, literacy project topics, researchcub.info, project topic, list of project topics, research project topics, journals, books, Academic writer.
The focus of this research is on the impact of financial literacy on the profitability of some small scale enterprises in Calabar Municipality, Cross River State. An enquiry into their level of adoption of financial literacy was also studied. A review of related literatures was carried out to examine the extent of work done in the field. A carefully structured questionnaire was used to collected data on the level of adoption of financial literacy and also a financial literacy test. Stratified random sampling was adopted to divide the small scale enterprises into ten (10) strata, thereafter ran.. accounting project topics
THE IMPACT OF FINANCIAL LITERACY ON THE PROFITABILITY OF SMALL SCALE ENTERPRISES IN CALABAR MUNICIPALITY, CROSS RIVER STATE