Abstract:
Small and Medium Enterprises (SMEs) are critical to the economy. SMEs exist in
every sector of the economy. The plantation sector is a landmark cable
manufacturing industry in the economy of Sri Lanka. The plantation sector
presently has more business ventures with SMEs. Therefore, the purpose of this
research is to examine the impact of financial management practices on the
financial performance of SMEs in the plantation sector. This study considered
financial management practices as the independent variable and the financial
performance of SMEs as the dependent variable. The data for this study was
collected using a questionnaire that was distributed to 40 SMEs in the plantation
sector in the Kalutara district using a purposive convenience sampling method. The
data was analyzed by using correlation analysis and regression analysis. According
to the correlation analysis, the findings revealed that all variables were positively
correlated with financial performance. Further, the regression analysis indicated that
working capital management practices, capital structure, management practices, and
financial reporting and analysis practices significantly affected financial
performance. The quality of financial performance through employing financial
management practices (FMPs) in plantation sector SMEs would be crucial for
proprietors, managers, executives, employees, and other interested parties who can
reasonably practice utilizing organizational resources for optimal financial
performance. This study continues the discussion on numerous practical suggestions
and provides directions for future research.
