Effect of Budgetary Process on Financial Performance of Small and Medium-Sized Enterprises in Kumi Municipality

Abstract

This study analyzed the effect of budgetary process on financial performance of SMEs. It was conducted under three objectives which sought to; examine the effect of planning and approval of budgets, effect of budget implementation and effect of budgetary performance on financial performance of SMEs in Kumi municipality. A case study was used for both quantitative and qualitative analysis on a sample of 92 of which only 87 respondents returned their questionnaires. The sample was selected using stratified random sampling and purposive sampling techniques. Data was obtained by use of questionnaires. Data was analyzed qualitatively and quantitatively. Quantitative data was analyzed using the Statistical Package for Social Scientists 16.0 (SPSS) program. Qualitative data was interpreted by carrying out explanations and substantiating them using the respondents open responses.

The study findings show the adjusted R Square of (0.086) which is 8.6%, implying that, budget planning and approval minimally affect positively 8.6% of financial performance of SME’s in Kumi municipality. The remaining percentage of 91.4% is un explained variability caused by other factors not mentioned in this report. The regression analysis results show the adjusted R square of (0.418) which is 41.8%. This implies that budget implementation process for SME’s affect positively 41.8 % of financial performance. The remaining 58.2 % are other factors affecting financial performance of Small and medium- sized enterprise. Further, regressions show the adjusted R square of 0.228 which is 22.8%. Implying that, budgetary control process affect positively 22.8% of financial performance of SME’s in Kumi municipality. The remaining

percentage of 77.2 is the unexplained variability and not included in this report as it is constituted by other factors.

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