TABLE OF CONTENT
DECLARATION
APPROVAL 1
DEDICATION Ii
ACKNOWLEDGEMENT iv
TABLE OF CONTENT v
LIST OF TABLES ix
ABSTRACT xi
CHAPTER ONE 1
BACKGROUND 1
1.1. Introduction 1
1.2 Problem Statement 3
1.3 Purpose of the study 3
1.4 Objectives of the study 3
1.5 Research questions 3
1.6 Significance of the study 4
1.7. Scope of the study 4
1.7.1. Time scope 5
1 .7.2. Content scope 5
1.7.3. Geographical scope s
1.8. Definition of key terms
1.9. Limitations of the study 6
CHAPTER TWO 7
LITERATURE REVIEW 7
2.0 Introduction 7
2.1. Conceptual frame work 7
2.2. Theoretical review 8
2.2.1 Financial planning and profitability of a firm 8
2.2.1 Modern portfolio model 8
V
2.2.2. The Capital Asset Portfolio Model.9
2.2.3. Trade off Theory 9
2.2.4. The Configuration Theory 9
2.3 Contextual review 10
2.3.1. Financial planning and liquidity 10
2.3.2. Financial planning and performance 11
2.3.3. Challenges encountered by the management in going about financial planning 11
2.4. Related Studies 12
CHAPTER THREE 14
RESEARCH METHODOLOGY 14
3.0, Introduction 14
3.1 Research design 14
3.2. Study population 14
3.3. Sample size
3.4. Sampling Procedure 15
3.5. Instruments 15
3.6. Data collection methods 16
3.7. Data processing 17
3.8. Data analysis 17
CHAPTER FOUR 18
PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS 18
4.0 Introduction 18
4.1 Biographic Characteristics of Respondents 18
4.1.1 Gender distribution of respondents 18
4.1:2 Age of respondents 19
4.1.3 marital status of the respondents 19
4.1.4 The level of Education 20
4.1.5 Department of respondents 21
4.1.6 Current positions of respondents 21
vi
4.1,7 The period of respondents spent with the union 22
4.1.8 Responses on period respondents spent working at their current position with the union.. 22
4.2 Findings on how financial planning has helped NGCU Ltd to increase its profitability 23
4.2.1 The management of NGCU Ltd always carries out financial planning 23
4.2.2 Plans are drawn after consulting the members 24
4.2.4 The plans emphasis is making profit every year as a major objective 25
4.2.6 The union prepares budgets every year 25
4.2.7 The financial budgets are from the plans of the union 26
4.2.9 The budgets are prepared after consulting the members 28
4.2.10 Budgets are evaluated periodically to ensure that the union makes profit 29
4.2.11: The plans and budgets are reviewed every six months 30
4.3 Findings on how financial planning has helped NGCU Ltd to improve on its liquidity 31
4.3.1 The management of NGCU Ltd always carries out financial planning to help in improving
its liquidity 31
4.3.2 The union always prepares cash budgets to monitor its liquidity 32
4.3.3 The cash budget emphases the monitoring of accounts receivable 33
4.3.4 The cash budget emphases the monitoring of clients loan and outstanding bills payables. 34
4.3.5 The cash budget helps the union to determine how much to borrow 35
4.3.6 The cash budget helps the union to determine how much and when to borrow 36
4.4.7 The cash budget helps the union to know when it has no cash vs. how much is to be
expected to be paid out 36
4.5 Findings on challenges faced by the management of NOCU Ltd when conducting financial
planning 37
4.5.1 Lack of staff with required skills and experience in financial planning 37
4.5.2 Low literacy rates of the majority of members of the union 38
4.5.3 Lack of proper evaluation and review of financial budgets 39
45.4 Insufficient financial resources to execute the plans of the union 40
4.5.5 Unstable prices of outputs and inputs 41
VII
CHAPTER FIVE .42
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 42
5.0 Introduction 42
5.1 Summary 43
5.1.1 How financial planning has helped NGCU Ltd to increase its profitability 43
5.1.2 How financial planning has helped NGCU Ltd to improve on its liquidity 43
5.1.3 Identifying the challenges faced by the management of NGCU Ltd when conducting
financial planning 44
5.2 Conclusions 45
5.3 Recommendations 46
5.4 Areas for further research 47
REFERENCES 47
APPENDICES 49
APPENDIX I: INTRODUCTORY LETTER 49
APPENDIX 11: RESEARCH INSTRUMENT 51
APPENDIX 111: RESEARCH BUDGET 57
APPENDIX IV: TIME FRAME WORK 58
APPENDIX V: ASKETCH MAP OF THE STUDY AREA (KASESE DISTRICT) 59
ABSTRACT The study was conducted in Kasese District. The research was done under the topic “financial planning and performance of small and medium enterprises” a case study of Nyakatonzi Growers Cooperative Union basing on the following objectives; To establish how financial planning has helped NGCU Ltd to increase its profitability To establish how financial planning has enabled NGCU Ltd. to improve its liquidity. To identify the challenges faced by the management of NGCU Ltd. when conducting financial planning. The study employed both quantitative and qualitative methods of data collection and analysis was also used. Purposive and simple random sampling was used to get a representative sample. The study found out that financial planning increases profitability in Nyakatonzi Growers Cooperative union; planning, evaluation of performance, for control purpose, continuous comparison of actual results against budgets to form a basis of standards and creation of responsibility centers in organizations. The researcher concluded that, financial planning has helped NGCU Ltd to increase its profitability this was evidenced from the data collected. Findings show that management of NGCU Ltd always carries out financial planning to help in increasing its profitability (by 76.5%), plans are drawn after consulting members (by 76.5%), plans emphasis is making profits every year as a major objective (by 70.6%), the union prepare budgets every year (by 82.4%), financial budgets are from plans of the union (by 73.5%), financial budgets are prepared to ensure the union makes profits every year (by 76.5%), budgets are also prepared afler consulting the members (by 76.5%), budgets are evaluated periodically to ensure that the union makes profit (by 73.5%), and the plans and budgets are receive every six months (by 78.8%). Effective financial planning provides reasonable assurance regarding the financial resources of NGCU Ltd.The researcher recommended thai. to increase its profitability through financial planning, the owners/managers of the union should undertake courses or training about financial planning and profitability or hiring workers with knowledge and skills in accounting and financial management. The government of Uganda or the local government or URA or any other support agent or academic institution can organize such training and charge some fees to the participant.
