Effect of Financial Management Strategies on Financial Performance of Micro and Small Enterprises in Calabar Metropolis

Abstract

This study examined the effect of financial management strategies on the financial performance of micro and small enterprises in Calabar Metropolis. The study was guided by three specific objectives: to determine the extent to which budgeting strategy, cash flow management, and investment decisions affect the financial performance of MSEs in Calabar Metropolis. A survey research design was employed, targeting all registered micro and small enterprises in Calabar Metropolis, encompassing a population of 1810 businesses in the commerce and industry sectors. A sample size of 317 micro and small enterprises was selected for the study. Data were collected using a validated 30-item structured questionnaire titled Financial Management Strategies and the Financial Performance of Micro and Small Enterprises Questionnaire (FMSFPMSEQ), assessed on a four-point rating scale. The reliability of the questionnaire was confirmed through Cronbach’s alpha, yielding coefficients of 0.80, 0.92, and 0.94. The data was descriptively analyzed using frequency tables, percentages, mean and standard deviation to evaluate the responses from the respondents, while an independent t-test was used to test the hypotheses at a significance level of 0.05. The findings revealed that budgeting strategy, cash flow management, and investment decisions significantly affect the financial performance of micro and small enterprises (MSEs) in Calabar Metropolis. Based on these findings, it was recommended, among other things, that micro and small enterprises adopt effective budgeting strategies to ensure better financial planning, resource allocation, and enhanced profitability Received: 15 May 2025 / Accepted: 28 June 2025 / Published: 18 July 2025