Liquidity Management Practices and Firm Stability in Small-Scale Industrial Enterprises
Main Article Content
Abstract
This study examined the liquidity management practices adopted by small-scale industrial enterprises and analyzed their effect on firm stability. A quantitative research approach was employed using a descriptive and explanatory cross-sectional survey design. Primary data were collected from 80 respondents, including owners, managers, accountants, and supervisors of small-scale industrial enterprises operating in manufacturing, agro-processing, textile, and related sectors. A structured questionnaire was used to gather information on demographic characteristics, liquidity management practices, and firm stability indicators. Liquidity management practices were measured through cash management, receivables management, inventory management, and payables management, while firm stability was assessed using indicators of operational continuity, financial resilience, and sustainability. Descriptive statistical results revealed that enterprises moderately applied liquidity management practices, with cash management being the most emphasized dimension and receivables management showing comparatively weaker control. Firm stability indicators also reflected a moderate level of resilience, particularly in sustainability improvement and financial planning. Inferential analysis showed that liquidity management practices had a positive and statistically significant relationship with firm stability. Regression analysis further indicated that liquidity management practices significantly predicted firm stability, although the explanatory power was modest, suggesting the influence of additional factors beyond liquidity practices. The findings underscore the importance of effective liquidity planning in enhancing enterprise stability and resilience. The study offers valuable insights for enterprise managers, policymakers, and financial institutions in strengthening liquidity management frameworks and designing supportive financial policies for small-scale industrial enterprises.
Article Details
Section
This work is licensed under a Creative Commons Attribution 4.0 International License.
How to Cite
References
1. Adegbedzi, D. K., Bosomtwe, E., & Omane-Adjekum, C. (2024). Short-Term Financial Management Practices and SME Performance in Ghana: A Case nStudy of Effutu Municipality. Open Access Library Journal, 11(7), 1-1.
2.Aderinto, A. (2025). Financial Risk Management and Corporate Performance of Selected Small-scale Firms in Nigeria. Available at SSRN 5230568.
3.Alvarez, G. C. (2023). THE IMPACT OF CASH MANAGEMENT PRACTICES ON LIQUIDITY IN PRIVATE HIGHER EDUCATIONAL INSTITUTIONS (HEIS) IN DISTRICT IV OF LAGUNA. Socio Economy and Policy Studies, 3(2), 85-90.
4.Chen, M., Tan, X., Zhu, J., & Dong, R. K. (2025). Can supply chain digital innovation policy improve the sustainable development performance of manufacturing companies?. Humanities and Social Sciences Communications, 12(1), 1-15.
5.Elly, D. O., & Kaijage, E. S. (2017). Effects of demand side factors on access to external finance by small and medium manufacturing enterprises in Nairobi, Kenya. African Development Finance Journal (ADFJ), 1(1).
6.Eton, M., Fabian, M., & Eliab, B. M. (2023). Financial management practices and small-scale businesses' profitability, from the viewpoint of Kabale Municipality, Uganda.
7.Fernando, N. (2025). Impact of cash management practices on the performance of the small-scale start-ups.
8.Folajinmi, A. F., & Peter, A. O. (2020). Financial management practices and performance of small and medium scale poultry industry in Ogun State, Nigeria. Journal of Finance and Accounting, 8(2), 90.
9.Fwamba, R. S. (2018). Influence of financial management practice on financial performance of sugar manufacturing companies in Kenya (Doctoral dissertation, COHRED-JKUAT).
10.Kituku, H. K. (2019). Effects of working capital management practices on financial performance of food and beverage manufacturing companies in Kenya (Doctoral dissertation, Kca University).
11.Kung’u, J. (2017). Effect of liquidity management practices on profitability of manufacturing industry in Kenya. IOSR Journal of Economics and Finance, 8(1), 84-89.
12.Maharjan, R. (2024). The Impact of Cash Management on Profitability and Sustainability of Small and Medium Manufacturing Business in Kirtipur Municipality (Doctoral dissertation, Shanker Dev Campus).
13.Melesse, W. E. (2020). Determinants of debt ratio levels among small-scale manufacturing enterprises in Ethiopia: Do government policies matter?.
14.Musah, A., Gakpetor, E. D., & Pomaa, P. (2018). Financial management practices, firm growth and profitability of small and medium scale enterprises (SMEs). Information management and business review, 10(3), 25-37.
15.Musiita, B., Boyi, B., Kisaalita, T., Mutungi, W., & Mbabazize, R. (2023). Liquidity management and financial performance of SACCOs in Bushenyi District.
16.Njue, A. (2020). Liquidity management and financial performance of microfinance institutions in Kenya (Doctoral dissertation, University of Embu).
17.Nketsiah, I. (2018). Financial management practices and performance of SMEs in Ghana: The moderating role of firm age. Open Journal of Economics and Commerce, 1(4), 8-18.
18.Olango, C. O., Museve, E., & Wu’Adongo, J. O. (2023). Effect of Agency Banking on The Performance of Small Scale Manufacturing Enterprises in Kisumu County, Kenya. International Journal of Social Sciences and Information Technology, 9.
19.Onyango, F. (2018). Effects of cash management on financial performance of small scale businesses. a case study of Kampala central division.
20.Panova, E. (2020). Determinants of capital structure in Russian small and medium manufacturing enterprises. Equilibrium. Quarterly Journal of Economics and Economic Policy, 15(2), 361-375.
21.Sokolova, L., Dyuzhev, V., Veriasova, G., Kurdenko, O., & Al-Fakhore, E. S. S. (2021). Scientific and methodological support of financial express analysis of small industrial enterprises of Ukraine. Сучасний стан наукових досліджень та технологій в промисловості, (3 (17)), 78-90.
22.Xuanling, M. A., & Meng, J. I. (2023). Analysis on liquidity risk management of monetary and financial services based on the goal of financial stability. Romanian Journal of Economic Forecasting, 26(2), 72.
23.Yosita, A., Syaipudin, U., & Amelia, Y. (2022). The effect of intellectual capital, size, leverage, and liquidity on company value in manufacturing companies listed on Indonesia Stock Exchange.
24.Yuan, H., & Du, X. (2025). Exploring the Mechanism of How the Market-Based Allocation of Data Elements Affects the Supply Chain Resilience of Manufacturing Enterprises: A Perspective on Data as a Production Factor. Sustainability, 17(17), 7950.
25.Zhao, X., Zhao, L., Sun, X., & Xing, Y. (2024). The incentive effect of government subsidies on the digital transformation of manufacturing enterprises. International Journal of Emerging Markets, 19(11), 3892-3912.