ABSTRACT
This study investigated the relevance of financial management to business growth in Nigeria. The specific objectives of the study were to ascertain the effect of working capital management practice on the growth of SMEs in Benin City, investigate the effect of investment evaluation practice on the growth of SMEs in Benin City, and examine the effect of capital structure management practice on the growth of SMEs in Benin City.
The descriptive design was appropriate for this study was the researcher attempted to find out the relevance of financial management to business growth without manipulating any of the variables. The researcher was interested in making observations on the status of the relationship as it is on the ground. The linear regression (ANOVA) analysis was used to test the close relationship between the variables and also to test the hypotheses of the study. The analysis was conducted using the Statistical Packages for Social Sciences (SPSS 23) software. The findings from the study revealed that there is significant relationship between working capital management (WCM) and SMEs growth in Benin City, there is a significant relationship between investment evaluation practice (IEP) and growth of SMEs in Benin City, and there is a significant relationship between capital structure management practice (CSMP) and growth of SMEs in Benin City.
The study then recommended that SMEs owners/managers should better manage their working capital because if they better manage their working capital, it will lower the need for borrowings, there is need for SMEs owners/managers to formulate policies that will enhance working capital management such as cash collection cycles so as to be capable of meeting their current cash liabilities using their current assets, there is need for SMEs owners/managers to fully adopt the capital budgeting decision, especially on the capital investment activities, there is need for owners/managers of SMEs to detailed evaluation of the capital projects they invest in using the various methods for project evaluation under capital budgeting decisions, as this will guarantee them return on their investments in the long-run which will definitely impact their business growth, there is need for owners/managers of SMEs to develop a policy that will ensure that consensus of the working capital management and capital budgeting practices, because by this, SMEs can afford to seek for funding to finance their capital investments that are supported by objective evaluation through various techniques that would increase the chances of getting funding, and SMEs owners/managers need to carry out record keeping for the growth and development of their business, which include recording business transactions to be able to track the income and expenditure of the business. Recording the amount owed to suppliers and other creditors such that they are able to establish the amount of cash against credit sales and the level of status of accounts receivable and keep accurate and up-to-date records.
