Republic of the Philippines

Region III – Central Luzon

Commission on Higher Education

TARLAC STATE UNIVERSITY

Romulo Blvd, Tarlac City, Tarlac

THE FINANCIAL MANAGEMENT PRACTICES OF MICRO-ENTERPRISES IN

TARLAC CITY

A Research Study Presented

To the Faculty of

Tarlac State University College of Business and Accountancy

In Partial Fulfilment of the Requirement

For the course of

Bachelor of Science in Business Accountancy

Major in Financial Management

Dr. Elizabeth Amurao

Professor
 Prepared by;

Lizarondo, Kae Svetlana

 ACKNOWLEDGEMENT

I would like to acknowledge and thank my lecturer, Dr. Elizabeth Amurao, for making this work

possible. Her help and counsel got me/us through every level of this study. I'd also like to thank my

group mates for making the defense a great experience, as well as for your amazing remarks and

recommendations.

I'd also like to thank my family, especially my parents and friends, for their unwavering support and

understanding throughout our research and writing of this project. Your prayers for me have kept

me going this far.

Finally, I'd like to thank God for allowing me to go through all of this. Every day, I benefit from

your guidance. You are the one that enabled me to finish my research. I will continue to put my

faith in you for my career.

 TABLE OF CONTENTS

Page

Acknowledgement

Chapter I: Introduction

The Problem and Its Background…………………………………………… 4

Statement of the Problem…………………………………………................. 7

Significance of the Study…………………………………………….............. 7

Scope and Delimitations……………………………………………………... 8

Definition of Terms……………………………………………….................. 9

Chapter II: Review Related Literature

Related literature……………………………………………………………... 12

Related Studies………………………………………………………………. 17

Conceptual Framework………………………………………………………. 20

Chapter III: Methodology

Research Design..……………………… …………………………………… 21

Population………………………………… ………………………………... 21

Sampling Design……………………………………………………………… 23

Methods of Gathering Data…………………………………………………… 23

Research Instruments…………………………………………………............. 24

Questionnaire…………………………………………………......................... 24

Statistical Treatment………………………………………………………...... 28

Bibliography
Appendices
 Chapter 1

THE PROBLEM AND ITS BACKGROUND

Introduction

Forming a business is never easy, especially if one is new and possesses little experience in

the business world. It will consume a lot of time, effort, and money. Along the way, you will face

various struggles such as competition, bankruptcy, and unforeseen and inevitable events that might

affect your business. However, all these factors are just steps to becoming a better and more

effective businessman.

According to Hayes (2021), An organization engaged in commercial, industrial, or

professional activity is referred to as a business. Businesses can be for-profit or nonprofit

enterprises dedicated to a charity mission or social cause. Enterprises can range in size from micro

to large enterprises. It also ranges in scale from a sole proprietorship to multinational organizations.

All types of businesses have similarities and differences when it comes to how they find

opportunities, how they forecast events, and most importantly, the financial management practices

that they perform.

Financial management practices have been defined as “the practice of handling a company’s

finances in a way that allows it to be successful and compliant with regulations that take both a

high-level plan and boots-on-the-ground execution” (Strutner, 2020). Good financial management

practices are pivotal for the success and survival of any business. However, some company owners

have little to no knowledge about financial management practices which leads to their business

failing miserably.
 Incorrect financial management practices may lead a company to bankruptcy. Muguchia

(2018) stated that the adoption of ineffective financial management practices has been identified as

one of the most significant causes of corporate failures in terms of financial trouble, mishandling of

finances, and a lack of long-term funding to fulfill operational costs and capital expenditures.

Improper financial management practices touch on negative factors that cause businesses to fall

such as market risk, credit risk, liquidity risk, and operational risk. It is proven that inefficient

financial management practices damage business efficiency, and this will continuously affect the

growth of the company.

Financial literature suggests that optimal application and commitment toward financial

management practices result in an increased company’s performance (Zaheer Butt et al., 2020).

Performing proper financial management practices has always proven efficient in business

operations and points companies to success as it ensures timely coordination of various activities of

the firms and correction of deficiencies, it ensures integration of businesses settings and the

operation of financial systems, and it helps companies to overcome issues such as mismanagement

of resource, competition, and risks.

Arguably, financial management practices strengthen business efficiency and are significant

to overcome company difficulties and challenges. It is the key to the sustainability, profitability, and

growth of a company. Examining a business’ financial management practices in the areas of cash

management, financing, and capital budgeting will help give essential comprehension of how

impactful financial management practices is in the overall success of a business.

This study aims to identify the financial management practices of micro-enterprises. With

this study, it will help future researchers with their studies related to this topic. They can use this

study as a reference and/or basis for their paper. Other than future researchers, this study will also
benefit entrepreneurs who want to start their business. This study will give them financial

knowledge specifically, about financial management practices that they will be applying when

running their business.

Statement of the Problem

This study aims to describe the financial management practices on micro-enterprises from

Tarlac City. The research sought to answer the following questions

1. What is the profile of the business owner in terms of;

1.1 Gender

1.2 Age

2. What is the profile of the enterprise in terms of;

a) Years in business

b) Number of employees

3. What are the financial management practices used by enterprises as to;

a) Cash Management

b) Financing

c) Capital Budgeting

4. What are the financial problems encountered by the business?

Significance of the Study

The main purpose of this study is to know the financial management practices of micro-

enterprises in Tarlac City. This study will help to gain better understanding of the importance and

impact of performing the proper and effective financial management practices in micro-enterprises.

The result of the study will benefit the following:

 To the owners of micro-enterprises. The result of the study will help owners of micro-

enterprises to have additional knowledge of what strategies and financial management practices

could help their business to become successful and stable.

To the future micro-enterprise owners. The result of this study will help future micro-

enterprise owners who plan to create a business. The study will benefit them by knowing what they

should do and at the same time understanding the strengths and weaknesses of establishing and

managing a micro-enterprise.

To the students in the field of commerce. The result of the study will help students in the

field of commerce to learn more things about business, strategies, risk, and factors that could help

them in the future if they got interested in creating a business.

To the researchers in the field of business. The result of the study will help the researchers

in the field of business to develop themselves as they gain knowledge in the study.

To the future researchers. The study will benefit the future researchers who will

encounter the same research. The study would serve as a guide for the future development of the

research related to financial management practices of micro-enterprises. The study will serve as

reference for future researchers.

Scope and Delimitation of the Study

This study aims to determine the financial management practices of micro-enterprises in

Tarlac City. The researcher aims to analyze how micro-enterprises manage their finances in terms

of financing and budgeting. Researchers also include the profile of the business and the personal

information of the owners.

 The researcher limits the study to fifty (50) sole proprietor micro-enterprises with business

permit that are registered for the year 2022. The study will be conducted in Barangay F Tanedo to

San Roque for the second quarter of the year. Each respondent will be given the same questionnaire

to answer.

This study will collect data through a survey questionnaire and will be undertaken by Tarlac

State University researchers during the second semester of the school year 2021-2022.

Definition of Terms

For the purpose of clarity and better understanding of this study, the following terms were

defined.

Age. It refers to the maturity and experience of a student in focusing, handling, and managing when

it comes to financial difficulties.

Business Efficiency. It refers to how the business or enterprise can produce products using its

resources and time.

Capital Budgeting. It refers to the process that a business uses to help decide the management on

the needed capital for certain activities or investments to allocate it accordingly and whether it will

decline or accept based on the budget.

Cash Management. It refers to the amount of money that a business needs to manage in terms of

investing, operating, and mitigating associated risks. (Corporatefinanceinstitute.com)

Credit Risk. It refers to the possibility of a loss resulting from a borrower's failure to repay a loan

or meet contractual obligations. (Investopedia)

Financial Literature. It refers to the confident knowledge of concepts such as saving, investing,

and debt that leads to a sense of general financial well-being and self-confidence.

Financial Management Practices. It refers to the disciplinary actions that businesses should adopt

for the betterment of the business to ensure the long and short-term goals of exceeding the return of

capital without taking an excessive financial risk. (mbaknol.com)

Financial System. It refers to the set of institutions, such as banks, insurance companies, and stock

exchanges, that permit the exchange of funds. (Investopedia)

Financing. It refers to the process of raising money or capital for company purposes, acquisitions,

or investments. (Britannica)

Liquidity Risk. It refers to the danger of losing money as a result of not being able to meet

payment obligations on time or at a reasonable cost when they become due.

Market Risk. It refers to the possibility that an individual or other entity will experience losses due

to arising from movements in stock prices, interest rates, exchange rates, and commodity prices.

(Investopedia)

Micro-enterprise. It refers to businesses operating on a very small scale, especially one with a sole

proprietor and fewer than six employees. (https://www.terrysimmons.com/micro-enterprises-digital-

products)

Multinational Organization. It refers to a corporation or enterprise where business activities are

spread among two or more countries. (Investopedia)

Profitability. It refers to the state or degree of yielding profit or financial gain.

Sex. It refers to whether female or male, it refers to the sex of the students. In order to understand

the comparison and differences between the two. The difference between the way they think and the

way they respond to the item they want or want to obtain is the desire of men and women.
Sole Proprietorship. It refers to any business owned by a single person. (Investopedia)

Sustainability. It refers to providing one’s needs and wants without compromising the needs of the

future generation. (www.mcgill.ca)

 Chapter 2

REVIEW OF RELATED LITERATURE

This chapter covers the related literature and related studies towards the practices of

financial management in micro enterprises in Tarlac City. The researcher will support and

acknowledged the different resources used in this study.

Related Literature

Financial Management Practices is one of the key determinants of economic growth and

development. A wise financial practice helps to alleviate poverty and provide job opportunities.

(Barbosa, 2021). It is proven in this literature that financial management practices such as coating

and budgeting are often practiced by MSEs however internal control, working capital management,

and long-term financing are rarely practiced.

Financial management is one of several management functional areas, but it is critical to the

success of any small firm. Financial management, in its broadest sense, is the management of a

company’s finances in order to meet its financial goals. Financial management is essentially about

mobilizing and utilizing funds. Raising the cash needed to finance the enterprise’s assets and

activities, allocating these funds between competing uses, and ensuring that the funds are used

effectively and efficiently in attaining the enterprise’s goal are all part of the financial management

process (Abanis et.al., 2013).

In the recent study of Rufo R Mendoza (2015) “Financial Performance of Micro, Small and

Medium Enterprises (MSMES) in the Philippines” revealed that in using the secondary data from

financial statements of the past 3 Enterprises performed favorably in liquidity and activity however

they experience a low-level profitability. Correlation analysis perceived that there is significant
linear relationship between (a) liquidity and leverage (b) activity and leverage (c) liquidity and

activity. T-test indicated that there is no significant difference in liquidity, profitability and

inventory turnover of enterprises when grouped according to organization form, business type and

asset size. The study suggests the MSMEs should review their strategy to improve profitability and

use financial information in making critical decisions.

Noor Aslinda Abu Seman (2019) revealed in the article entitled, “An Analysis of Basic

Accounting Practices of Microenterprises” that Micro enterprises which are formed by the

companies with the lowest characteristics among the Small and Medium Enterprises (SMEs) are

now playing an important role to contribute economic growth and poverty execution.

Microenterprise as a form of entrepreneurship had been characterized as one of the major forces for

job creation, further contributing to economic growth, and their contribution mainly depends on

their performance. But numerous studies have revealed that the failure of small businesses such as

microenterprises was mainly caused by inadequate entrepreneurial skills. One of the most important

entrepreneurial skills that can help microenterprise business operations to become a success is

accounting practices.

According to SME info, accounting practices are vitally important to Small and Medium

Enterprises (SMEs) in making a beer financial and management decisions. They also help to

prepare on annual taxes payment and furthermore, help to plan for the next step in thebusinesss.

Accounting system is used to manage, monitor, and control the income, expenses, and other

financial activities of a business, including to prepare for the taxation purpose as well as supporting

the organizational functions. Furthermore, it also useful to measure the financial performance of the

company (Uddin et.al., 2019) Knowing enough and being knowledgeable in accounting makes it
easier for micro-business owners to manage their business through accessible financial practices

that can make the business grow fast.

High costs in the involvement of qualified personnel make it very difficult for Small and

Medium Enterprises (SMEs) owners to maintain proper book accounts. In fact, they also failed to

uphold proper account books to avoid tax payments. They assumed that the overall impact of poor

financial record keeping is that the owners who provide strong financial statements could prevent

them from conducting financial analysis to establish trends to find out whether their business is

working properly or not. They are also unable to understand and foresee the business environment,

and this is one of the indicators of business failure. Naturally, the main aim of conducting a

business is to gain profit. (Azeko, 2019).

Small, medium-sized, and micro-enterprises (SMMEs) in South Africa were investigated for

financial management techniques in this article. More than half of the SMMEs studied utilize

outside accounting employees to create accounting reports, and more than 60% use outside

accounting professionals to interpret and apply accounting data. The majority of SMME owners

lacked financial statement interpretation abilities and understanding. As a result, policymakers,

business support organizations, banks, and academic institutions should concentrate on better

teaching MSMEs in financial management, reducing the risk of cash flow problems and business

failure (Brijlal, Pradeep et.al., 2014).

Basic practices among microenterprises stand the risk of hitting cash flow crisis, wasting

money, and losing opportunities to expand their businesses. Even though financial information can

be used to measure performance, growth, financial position and the impact of improper decisions,

the failure of a proprietary company may be associated with inadequate accounting records

(Ferreira, Azevedo, & Ortiz, 2018) Every enterprise faced many financial problems, some may lead
to bankruptcy for not being able manage the microenterprise’s finance well and do not have enough

ideas how to execute smart financial practices. Microenterprises have a big impact on our economy

as well as society for small business really matters, that is why entrepreneurs must have a lot of

ideas how to make financial practices very well.

According to Lindon Robinson (2021) in the book entitled “Financial Management for

Small Businesses: Financial Statements & Present Value Models”, she presented a management

process needed by small businesses which is; 1) develop the firm’s mission statement; 2) choose the

firm’s strategic (long-term) goals and tactical (short-term) objectives; 3) identify the firm’s

strengths, weaknesses, opportunities, and threats; 4) develop the firm’s strategy for accomplishing

its strategic goals and tactical objectives; 5) implement the firm’s strategy; and last but not the

least,; 6) evaluate the firm’s performance. She also emphasizes that we are all managers, all the

time so in the management process, deciding on our aims and objectives is critical. Without clearly

defined goals and objectives, we will be unable to complete our mission. Goals and objectives

motivate us to assess our internal strengths and weaknesses, as well as external threats and

opportunities, a process that identifies the resources and limits that will help us achieve our purpose.

Following the formulation of our goals and objectives, as well as an honest assessment of our

strengths, weaknesses, opportunities, and threats, we decide on a strategy, or action plan, to carry

out our mission. Following the formulation of our goals and objectives, as well as an honest

assessment of our strengths, weaknesses, opportunities, and threats, we decide on a strategy, or

action plan, to carry out our mission. Strategic management necessitates that we carry out our

strategy and take precise activities to ensure that we meet our objectives. Finally, we assess our

goals, objectives, and understanding of our strengths, weaknesses, threats, and opportunities, and

make any necessary changes. Then, once we've completed the management process, we repeat it

indefinitely, not always following the steps in the management process in the same order.
 Several studies were conducted in different regions and cities within and outside the

Philippines on the financial management practices of micro enterprises (Anoos, et.al., 2020). The

majority of these studies are broad, but no complete research has been done in the Tarlac City

specifically in Tarlac to evaluate the practices of financial management. Given the government's

efforts to promote and support micro and small enterprises in the Philippines.

Tarlac is one of the oldest municipalities in the Philippines' province of Tarlac City. Most of

its businesses are classified as micro enterprises and the majority of the owners are managers

themselves. This industry adds to the town's economic growth as well as the Philippines' GDP.

However, given their limited resources and financial management procedures, questions about the

viability and financial growth of these businesses arise. Moreover, Gawali & Gadekar (2015)

proved that financial management knowledge and practices directly influence the success or failure

of Micro and Small Enterprises. Bruyns, Gericke, Kriel & Malan (2012) also said a financial

management system has little value if it cannot be evaluated. It is very crucial to properly evaluate

this sector in terms of financial management practices to possibly give feedback and interference to

support the Micro Enterprises and government’s platform in developing the MSEs. Therefore, the

researcher's attention had been piqued by the existing financial management practices used by these

businesses.

Related Studies

Reynalyn Barbosa conducted a study entitled “Financial management practices of micro and

small enterprises in Tanauan, Leyte, Philippines”. The study showed that MSEs, which dominate

the market in Tanauan, Province of Leyte, play a critical part in the Philippines' economic growth

and development. They assist in poverty reduction and job creation. The goal of the research was to

find out how MSEs in Tanauan, Leyte, Philippines handled their finances. Purposive sampling was
used to conduct a survey of the 146 MSE owners and staff. To determine the financial management

methods of MSEs, the data was evaluated using descriptive measurements such as frequency,

percentage, and mean. The respondents' profile and financial management methods are divided into

two sections of the survey questionnaire. Financial management strategies including costing and

budgeting are commonly used by MSEs, according to the findings. Internal controls, net working

capital, and long-term finance, on the other hand, are rarely used. Financial management systems

were present in general, but they were only used sometimes, with an overall mean of 2.84. MSE

management doesn't really follow commonly accepted financial management and control norms,

according to the findings. The Department of Trade and Industry (DTI) should assess programs and

policies related to the development of this sector in collaboration with the Tanauan Local

Government Unit (LGU). Furthermore, stringent execution of programs and regulations to

overcome the issue of academic credentials and retraining on financial management standards and

processes would be focused on improving the MSEs' long-term viability.

Similar research by Sandra Marcos (2021) namely, Financial Management Practices and

Profitability of Micro And Small Medium Enterprises In The New Normal In The National Capital

Region, Philippines stated that MSMEs are an important aspect of the global economy, working as

a determinant of economic development and development. The goal of this study is to look at

MSMEs' financial management and profit under the New Normal, as well as the issues they face. It

also underlines the importance of MSMEs in the international economy, especially in developing

markets, as well as company profitability during the Covid 19 pandemic. It also highlights the need

of making better financial management decisions based on sound financial management practices,

which are critical for MSMEs' survival, growth, and profitability in the New Normal. Secondary

data was acquired from published papers, such as publications and financial statements from

MSMEs that took part in the experiment either directly or indirectly. According to the study,
financial management techniques such immovable financial services, capital requirements

managerial staff, personal finance, operating cash flow, corporate finance, and financial reporting

are largely important for MSMEs' success or failure. Despite the complexity of surviving the

COVID-19 Pandemic, effective money management is critical.

A study was done last 2020 namely, Financial Management of Micro, Small, and Medium

Enterprises in Cebu, Philippines concludes that micro, small, and medium enterprises (MSMEs)

play an important role in the development of the Philippine economy by eliminating poverty and

providing jobs for the country's rapidly rising labor population. The goal of this research was to

uncover the management accounting system and issues that MSMEs in Danao City, Philippines,

face. This study was done among MSMEs in Danao City, Cebu, using the correlation research

approach. The 354 owners and managers of MSMEs who took part in the survey. Cluster-sampling

is used to choose them. This study also used a survey tool created by the researchers to acquire

important information on the MSMEs' characteristics, financial management procedures, and

difficulties. The collected data was treated using recurrence, simple percentage, mean scores, Chi-

square check of dependence, and ANOVA. The financial management system was found to be

moderately used, according to the research. It was determined that MSMEs' management does not

follow generally accepted norms for financial planning and operations of their businesses, which

poses a threat to their long-term viability given their small size, low asset volume, and low income

earned. The researchers highly advise local government authorities to pass a municipal law

emphasizing the importance of MSMEs in adhering to government regulations in order to boost

business activities in regional offices.

Charles Waweru and Dr. Karanja Ngugi conducted a study entitled, “Influence of Financial

Management Practices on the Performance of Micro and Small Enterprises in Kenya”. Relative to
the current study, the two said that Micro and small businesses (MSEs) are recognized as a driving

force for economic development in every country. MSEs frequently face major financial challenges

due to a lack of financial management knowledge mixed with the volatility of the business

environment. The major goal of this research was to see how financial management techniques

affect the performance of Micro and Small Businesses in Kenya.

The survey discovered that investing may be defined as the redirection of resources from today's

consumption to future rewards and that the development of an effective business support system is

also a vital requirement for the success of investment capacity building. Furthermore, respondents

firmly agreed that investing required business support agencies with a demonstrated ability to

penetrate the MSE sector. This study suggests that financial innovations have a significant impact

on the performance of Micro and Small Enterprises in Kenya, and that the primary motivation for a

company to innovate is to increase profits.

He thought that, although economics concentrated on external impacts on businesses, change might

come from within and then go through a business cycle to truly achieve economic transformation.

In terms of innovation, he established a new production function in which the entrepreneur is seen

as creating new combinations of already existing materials and forces, such as the introduction of a

new good, a new technique of production, or the creation of a new market.

On the measures of financial performance, Chong (2008) identified profit and asset turnover to

assess short-term duration but steady revenue growth rate and growth in the employment size to

measure long-term capacity. The Kennas Chartered Accountants (2014) considered profitability

and return on assets as the key performance indicators that are critical in understanding the state of

financial health of a business. The four commonly used measures are liquidity, activity, leverage,

and profitability (Levy et.al., 2014). The Statistics Canada (2014) used solvency in lieu of liquidity
and efficiency in lieu of activity. Melicher & Norton (2000) used asset management synonymously

with activity and included market value for entities listed in the stock exchange.

Conceptual Framework

Independent Variable (IV) Dependent Variable (DV)

Financial Management
Practices

 Cash management Financial performance

practices
 Capital budgeting
practices
 Financing practices

Figure 1. Schematic diagram of the study

The primary objective of this study is to show the financial management practices of micro-

enterprises in relation to their financial performance. Figure 1 shows the proposed conceptual

framework for the current research. The independent variables (IV) included three variables (cash

management practices, capital budgeting, and financing practices). One of the independent variables

is cash management practices. This pertains to the practice of collecting and managing cash flows in

the business environment. Individuals and businesses can benefit from good cash management

practices. Cash management is used to meet the obligation of the company. Furthermore, capital

budgeting is also necessary to evaluate and helps the company in assessing on what will be the best

high return project in future. Meanwhile, financing practices is also included in independent
variables, financing practices are the process at which it provides funds in business activities and

projects, purchasing assets, and investing. The dependent variable (DV) to be tested is the financial

performance of the micro-enterprises. Financial performance of a business is used as a subjective

indicator. It determines how successful a company can manage its assets from its primary mode of

creating revenues. Investors and Analyst uses financial performance to compare the similarity of

one business to another business.

In this study, the three variables will be used to show the relationship of these financial

management practices to the financial performance of the enterprises.

 Chapter 3

METHODS OF STUDY AND SOURCES OF DATA

This chapter describes the operational design of the study which includes the research

design, population, sampling design, methods of gathering data, instruments for gathering data and

statistical treatment.

Research Design

Research design involves the methods used to carry out the research. This study used

descriptive research design in which to determine the financial management practices of micro-

enterprises in Tarlac City. The researcher will prepare a set of questionnaires in check list form.

The questionnaire will be composed of different practices that might affect their business, in which

the respondents will determine their frequency of usage by checking on 5 as always and 1 as never.

This design was ideal in the collection of the information. It employs correlation and

regression analysis in studying relationships between variables. For the experts to evaluate the

questionnaire, a checklist will be provided for them. The evaluation will be divided into 4; cash

management practices, financing practices, capital budgeting practices and financial problem. For

the validation of the data gathered, the questionnaires will be passed to the experts and school

administrators.

Population

Currently, there are around 250 micro-enterprises registered in Tarlac City according to the

Bureau of Internal Revenue (BIR). It happens that because there are a large number of micro-
enterprises in the province of Tarlac, the researchers decided to concentrate on those micro-

enterprises owned by sole-proprietors and are located inside Tarlac City, specifically from

Barangay F. Tanedo to San Roque. The sample population of the respondents will be resulting to

fifty (50) sole proprietor micro-enterprises as the researchers decided to limit the study to only fifty

(50) sole proprietorship micro-enterprises with business permit that are registered for the year 2022.

Sampling Design

The respondents will be selected based on the convenience of a simple random sampling

method. A simple random sampling procedure was used for selecting the respondents in this study.

This technique has been employed to ensure a fairly equal representation of the variables for the

study. This technique is also considered as the easiest and least time consuming.

Methods of Gathering Data

To perform this study, the researchers will follow a systematic procedure. The researchers

will adapt a questionnaire in order to gather first-hand information from the respondents.

The researchers will use primary data in the analysis. Primary data entails firsthand data that

has not been published or documented in books or any other form of publications. Questionnaire

were preferred due to it being able to provide first-hand information that has not been altered, at the

shortest time possible while still maintaining the anonymity of the respondents.

The respondents for this study will be the owners of micro-enterprises in Tarlac City. The

researchers will personally send questionnaires via Google Forms to the respondents. A link to the

questionnaire will be provided via Google Forms. Retrieval of the questionnaire will be accessible
due to the application of the Google Forms. Microsoft Forms was chosen by the researchers in the

reason of the platform is the most convenient way of disseminating the questionnaires.

Instruments of Gathering Data

A researcher-made survey questionnaire will be used to gather the data needed in the study.

The data required for the questionnaires will be gathered based on previous research instruments.

The selected questions were compiled coming from different surveys to achieve the research

objectives.

As part of the researcher’s partial requirement for the subject ‘Business Research’ in the

degree of BS Business Administration in Financial Management. The researchers are conducting a

survey about the research “THE FINANCIAL MANAGEMENT PRACTICES OF MICRO-

ENTERPRISES IN TARLAC CITY”. The researchers will appreciate it if you could complete

the following table. Any information obtained in connection with this study that can be identified

with you will remain confidential.

1. PROFILE OF OWNER
1.1. Sex

Male [ ]
Female [ ]

1.2. Age ______

2. PROFILE OF BUSINESS

2.1. Length of years in business ______

2.2. Number of employees in your organization ______

 PUT A
CHECK (√ ) ON
THE BOX THAT
CORRESPONDS
TO YOUR
ANSWER.
MAKE SURE TO
READ EACH
QUESTION
CAREFULLY
AND DO NOT
LEAVE ANY
BOXES BLANK
UNLESS
STATED
OPTIONAL.

1. FINANCIAL MANAGEMENT PRACTICES

1.1.Cash Management Practices

Please indicate the frequency of usage of the listed cash management practices in your
organization. Use a scale of 1 to 5 where 1 = Never, 2 = Rarely, 3 = Sometimes, 4 = Often, 5
= Always

Cash Management Practice 1 2 3 4 5

a) Preparation of cash budgets
b) Determination of target cash balance
c) Investing surplus cash in marketable securities
d) Analysis and forecasting of cash flows
 e) Cash accounting and records keeping
f) Review of billing and cash collection and disbursements
g) Supervision of cash collection and disbursements
h) Review of payment schedules

1.2. Financing Practices

Please indicate the frequency of usage of the listed financing practices your
organization. Use a scale of 1 to 5 where 1 = Never, 2 = Rarely, 3 = Sometimes, 4 = Often, 5
= Always

Financing practice 1 2 3 4 5
a) Review of viable sources of financing
b) Use of short-term financing sources
c) Review of cost-effective financing sources
d) Usage of long-term financing sources
e) Estimation of costs of financing sources
f) Review of financing external financing
agreements
g) Financing structure review and analysis
h) Review of funds management and utilization
i) Review the firm’s debt repayment capacity

1.3. Capital Budgeting Practices

Please indicate the frequency of usage of the listed budgeting practices in your
organization. Use a scale of 1 to 5 where 1 = Never, 2 = Rarely, 3 = Sometimes, 4 = Often, 5
= Always

Budgeting Practice 1 2 3 4 5
 a) Estimation of projects expected and current cash flows
b) Measuring of projects risks
c) Monitoring project implementation and progress
d) Project abandonment and replacement analysis
e) Review of available expansion opportunities
f) Review of the firm project appraisal techniques
g) Project financing option analysis
h) Cost benefit analysis of firm projects

2. FINANCIAL PROBLEMS
Please indicate the frequency of financial problems encountered by the business. Use a
scale of 1 to 5 where 1 = Not at all a problem, 2 = Minor problem, 3 = Moderate problem, 4 =
Serious problem, 5 = Very serious problem

Financial problems 1 2 3 4 5
a) Access to funding
b) Debt Repayment
c) Inconsistent Cash Flow
d) Emergency expenditures
e) Reporting
f) Taxes

Statistical Treatment

According to Mugenda (2003), data analysis is the way toward giving meaning and order to

the data gathered. Primary data gathered and analyzed utilizing the descriptive statistics in terms of

mean values.

To show the relationship between the independent and dependent variables, the following

multiple linear regression model was used;

Where Y is the financial performance as measured by a frequency scale, β0 is the free term of the

equation. β1, β2, and β3 are the coefficients of independent variables

x1 = Cash management practices as measured by the frequency scale

x2 = Financing practices measured by the frequency scale

x3 = Capital budgeting practices measured by the frequency scale

To measure the significance of these data, an F-test and t-test at 5% significance level were

conducted to determine the strength of the model and the effect of financial management practices

on the financial performance of the micro-enterprises in Tarlac City.

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 APPENDICES
A. Letter of Confidentiality
B. Questionnaire
C. Encoded Data