Extent of Application of Working Capital Management Practices in Small and Medium Scale Enterprises in Enugu State

Abstract 

The study was conducted to determine the extent of application of working capital management practices in small and medium scale enterprises in Enugu State. Four research questions were developed and answered by the study while four null hypotheses were formulated and tested at p ≤ 0.05 level of significance. The study adopted descriptive survey research design and was carried out in Enugu State. The population for the study consisted of registered 150 small and medium scale business enterprises (SMEs) operators drawn from the three senatorial zones in Enugu State. Due to the manageable size of the population, the entire population was studied; therefore, there was no sampling. The instrument for data collection was a structured 69-item questionnaire entitled Application of Working Capital Management Practices Questionnaire (AWCMPQ), for the purpose of collecting data for the study from the respondents. The research instrument was subjected to face validation by three experts in the Department of Vocational Teacher Education, University of Nigeria, Nsukka. Based on their comments, some corrections were made on the questionnaire to enhance the validity of the research instrument. To determine the reliability of the instrument, the instrument was trial - tested by administering 20 copies of the questionnaire to 20 small and medium scale operators in Anambra State. Therefore, Cronbach Alpha Reliability Method was used, and Cronbach alpha coefficients of 0.83 was obtained for inventory (stock) management practices; 0.79 for cash management practices; 0.77 for debtor’s management practices while 0.85 was obtained for creditors management practices. The overall reliability coefficient of 0.80 was obtained for the entire 69 items in the instrument. Data for the study were collected with the help of nine (9) research assistants. The data collected were analyzed using mean to answer research question, while t-test statistics and analysis of variance (ANOVA) were used to test the hypotheses at 0.05 level of significance. Generally, the study found out that operators of small and medium scale enterprises in Enugu State were to a low extent applying working capital management practices of inventory (stock) management, cash management, debtor’s management and trade creditor’s management practices in their business operations in the State. Based on the above findings, the study among others, recommended that there should be regular workshops organised by experts and academics to sensitize the operators of small and medium scale enterprise on effective application of capital management practices for better performance in the business.