FINANCIAL MANAGEMENT OF SMALL BUSINESS ENTERPRICES IN NIGERIA.
BY AJUGWE CHUKWU ALPHONSUS
1) INTRODUCTION:
Financial Management is absolutely necessary for the success of any business. The Financial management is a powerful tool used to analyze how much value the management of the firm added to the investment of the shareholders into the company. This view is supported by Horne (2003) when he opined that the objective of a company must be to create value for its shareholders. Value is represented by the company’s common stock, in turn, is a function of the firm’s investment, financing, and dividend policy decisions. A sound dividend policy attracts more funds for investment which may lead to the expansion of the firm; such sound dividend policy could only be possible through effective and efficient management of finance or funds that are injected into the business. That is why the Mangers must struggle very hard to maximize the profit, so that earning per share of the firm will be very high as it is published as the value of stock and that is what attracts the investors and informs the public about the profitability of the organization. However, shareholders fund is calculated from the profit of the firm. It is instructive to note the disadvantage of using earning per share only to determine the financial strength of the firm as the earning per share does not take into consideration the risk inherent in such investment. Nevertheless, the shareholders’ value is the parameter in determining how sound is the management of business enterprise and it can also be used to compare other businesses performance. It is very critical in the running of the firms.
Financial management involves not only the management of available funds but projections of how to generate more funds and their applications. Entrepreneurs should not only invest the available funds wisely but must search how to source more funds to expand their operations. Baker and Powell (2005) define...