Thesis

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COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
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Chapter 1
THE PROBLEM AND ITS BACKGROUND
Introduction
“Those who do not manage their money will always work for those who do”.
-Anonymous
All successful business men start on how they manage their finances. The strategies they
use to maintain and grow their business and bank accounts depend on how they spend, where they
invest and what are their habits in savings. Proprietors should anticipate their financial needs and
consider allocating funds and where to acquire resources. These financial approaches are linked to
the success or failure the firm. These are the small steps that can lead to bigger platform or goes
under with deficits and bankruptcy. Henry Ford once said that money is an arm and a leg; you
either use it or lose it. Being money oriented is one of the approaches that can be used by a
proprietor. The PEW Charitable Trust (2015) states that 9 in 10 Americans favor financial stability
over upward mobility and Six in 10 households (60 percent) report experiencing a financial shock
and lastly more than half (56 percent) report worrying about their finances over the past year. The
most frequently reported financial worries include lack of savings (83 percent), not having enough
money to cover expenses (71 percent), and not having enough money to retire (69 percent). This
shows their awareness about their finances that results in the improvements in their financial
securities.
In the Philippines, one of the government’s strategies is financial inclusion to provide

financial products and financial services for all. The Inclusive Financial is important to every
household as it provides access to financial services and payments credit and investments makes a
substantially positive difference in people’s lives (BSP, 2015). This carries the potential of
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improving the well-being of the unserved and underserved markets such as the low-income and
marginalized, small and medium enterprises (SMEs).
Small and medium enterprises play a vital role in the country’s overall production
networks and they are the core to economic growth of developing countries (Maarg, 2016). For a
long time, SMEs help every country around the world develop and improve the standard of living
of the simple families around the society. The innovation process of the 21 st century is radically
different to that of the preceding one. Perhaps the most important difference is the new or renewed
importance of the new and small firms. Today SMEs are one of the main sources of innovation,
introducing new products and brings change in the economy. They also produce employment;
providing job to society to help reduce poverty and of national income for the government. The
Philippine government recognize this fact and provide several programs like Shared Services
Facilities (SSF), SME Roving Academy, (DBFTA), Department of Trade and Industry (DTI).
Furthermore, income performance determines whether the business gain or lose profit.
Income performance depends on how proprietors use business assets to generate revenue,
profitability of the investment and managing debts and expenses. It dictates whether the business
should continue to operate or seize to exist and the health and growth of it. In the Philippines, the
number of SMEs grew by 66% from 492,510 in 1995 to 816,759 in 2011. Similarly, the numbers
of those employed by these firms have grown by 45.7% from 2.7 million in 1995 to 3.9 million in
2011. Despite these statistics numerous constraint to further growth and productivity, including
credit constraints, cumbersome registration procedures and strict regulatory environments, and
other challenges related to an economic playing field that is not level between large and small
firms arises (Mendoza & Melchor, 2014). The Philippine policy environment for SMEs, compared
to its ASEAN neighbors, attributes a weak performance of SMEs to the large number of barriers
prevalent in the country’s business climate, notably limited access to finance, technology and
skills; the persistence of information gaps; and difficulties with product quality and marketing. In
spite of substantial trade and investment liberalization, penetrating the export market and making
SMEs internationally competitive remain persistent challenges (Aldaba, F. & Aldaba R, 2012).
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Nevertheless, this study seeks to determine what financial approach of the proprietors of
small and medium enterprise (SMEs) use that best highlights the income performance of the
business.
Theoretical Framework
This study entitled, “The Impact of Financial Approaches of Small and Medium Enterprises to its
Income Performance: Basis for Fiscal Literacy Program” is based on the Theory of Constraints,
Capital Structure Theory, and Keynesian Theory, which supports that financial perspective has a
significant impact on the income performance of small and medium enterprises.
Theory of Constraints
The Theory of Constraints is a methodology for identifying the most important limiting factor
that stands in the way of achieving a goal and then systematically improving that constraint until
it is no longer the limiting factor. In manufacturing, the constraint is often referred to as a
bottleneck.
The Theory of Constraints takes a scientific approach to improvement. It hypothesizes that every
complex system, including manufacturing processes, consists of multiple linked activities, one
of which acts as a constraint upon the entire system (i.e. the constraint activity is the “weakest
link in the chain”). The Theory of Constraints provides a powerful set of tools for helping to
achieve that goal, including:
 The Five Focusing Steps (a methodology for identifying and eliminating constraints)
 The Thinking Processes (tools for analyzing and resolving problems)
 Throughput Accounting (a method for measuring performance and guiding management

decisions)
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Dr. Eliyahu Goldratt conceived the Theory of Constraints (TOC) and introduced it to a wide
audience through his bestselling 1984 novel, “The Goal”. Since then, TOC has continued to
evolve and develop, and today it is a significant factor within the world of management best
practices. One of the appealing characteristics of the Theory of Constraints is that it inherently
prioritizes improvement activities. The top priority is always the current constraint. In
environments where there is an urgent need to improve, TOC offers a highly focused
methodology for creating rapid improvement.
A successful Theory of Constraints implementation will have the following benefits:
 Increased profit (the primary goal of TOC for most companies)

 Fast improvement (a result of focusing all attention on one critical area – the system
constraint)
 Improved capacity (optimizing the constraint enables more product to be manufactured)
 Reduced lead times (optimizing the constraint results in smoother and faster product flow)
 Reduced inventory (eliminating bottlenecks means there will be less work-in-process)
Capital Structure Theory
Modigliani and Miller, two professors in the 1950s, studied capital-structure theory intensely.
From their analysis, they developed the capital-structure irrelevance proposition. Essentially, they
hypothesized that in perfect markets, it does not matter what capital structure a company uses to
finance its operations. They theorized that the market value of a firm is determined by its earning
power and by the risk of its underlying assets, and that its value is independent of the way it
chooses to finance its investments or distribute dividends.
The basic M&M proposition is based on the following key assumptions:
 No taxes
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 No transaction costs
 No bankruptcy costs
 Equivalence in borrowing costs for both companies and investors
 Symmetry of market information, meaning companies and investors have the same
information
 No effect of debt on a company's earnings before interest and taxes
Of course, in the real world, there are taxes, transaction costs, bankruptcy costs, differences in
borrowing costs, information asymmetries and effects of debt on earnings. To understand how the
M&M proposition works after factoring in corporate taxes, however, we must first understand the
basics of M&M propositions I and II without taxes.
Modigliani and Miller's Capital-Structure Irrelevance Proposition
The M&M capital-structure irrelevance proposition assumes no taxes and no bankruptcy costs. In
this simplified view, the weighted average cost of capital (WACC) should remain constant with
changes in the company's capital structure. For example, no matter how the firm borrows, there
will be no tax benefit from interest payments and thus no changes or benefits to the WACC.
Additionally, since there are no changes or benefits from increases in debt, the capital structure
does not influence a company's stock price, and the capital structure is therefore irrelevant to a
company's stock price. However, as we have stated, taxes and bankruptcy costs do significantly
affect a company's stock price. In additional papers, Modigliani and Miller included both the
effect of taxes and bankruptcy costs.
Modigliani and Miller's Tradeoff Theory of Leverage
The tradeoff theory assumes that there are benefits to leverage within a capital structure up until
the optimal capital structure is reached. The theory recognizes the tax benefit from interest
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payments - that is, because interest paid on debt is tax deductible, issuing bonds effectively
reduces a company's tax liability. Paying dividends on equity, however, does not. Thought of
another way, the actual rate of interest companies pays on the bonds they issue is less than the
nominal rate of interest because of the tax savings. Studies suggest, however, that most companies
have less leverage than this theory would suggest is optimal. (Learn more about corporate tax
liability in How Big Corporations Avoid Big Tax Bills and Highest Corporate Tax Bills By
Sector.) In comparing the two theories, the main difference between them is the potential benefit
from debt in a capital structure, which comes from the tax benefit of the interest payments. Since
the MM capital-structure irrelevance theory assumes no taxes, this benefit is not recognized,
unlike the tradeoff theory of leverage, where taxes, and thus the tax benefit of interest payments,
are recognized. In summary, the MM I theory without corporate taxes says that a firm's relative
proportions of debt and equity don't matter; MM I with corporate taxes says that the firm with the
greater proportion of debt is more valuable because of the interest tax shield.
MM II deals with the WACC. It says that as the proportion of debt in the company's capital
structure increases, its return on equity to shareholders increases in a linear fashion. The existence
of higher debt levels makes investing in the company riskier, so shareholders demand a higher risk
premium on the company's stock. However, because the company's capital structure is irrelevant,
changes in the debt-equity ratio do not affect WACC. MM II with corporate taxes acknowledges
the corporate tax savings from the interest tax deduction and thus concludes that changes in the
debt-equity ratio do affect WACC. Therefore, a greater proportion of debt lowers the company's
WACC.
Keynesian Theory
Keynes's theory of the determination of equilibrium real GDP, employment, and prices focuses on
the relationship between aggregate income and expenditure. Keynes used his income‐
expenditure model to argue that the economy's equilibrium level of output or real GDP may not
correspond to the natural level of real GDP. In the income‐expenditure model, the equilibrium
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level of real GDP is the level of real GDP that is consistent with the current level of aggregate
expenditure. If the current level of aggregate expenditure is not sufficient to purchase all the real
GDP supplied, output will be cut back until the level of real GDP is equal to the level of aggregate
expenditure. Hence, if the current level of aggregate expenditure is not sufficient to purchase
the natural level of real GDP, then the equilibrium level of real GDP will lie somewhere below the
natural level. In this situation, the classical theorists believe that prices and wages will fall,
reducing producer costs and increasing the supply of real GDP until it is again equal to the natural
level of real GDP.
Sticky prices. Keynesians, however, believe that prices and wages are not so flexible. They believe
that prices and wages are sticky, especially downward. The stickiness of prices and wages in the
downward direction prevents the economy's resources from being fully employed and thereby
prevents the economy from returning to the natural level of real GDP. Thus, the Keynesian theory
is a rejection of Say's Law and the notion that the economy is self‐regulating.
Keynes' income‐expenditure model. Recall that real GDP can be decomposed into four component
parts: aggregate expenditures on consumption, investment, government, and net exports.
The income‐expenditure model considers the relationship between these expenditures and current
real national income. Aggregate expenditures on investment, I, government, G, and net
exports, NX, are typically regarded as autonomous or independent of current income. The
exception is aggregate expenditures on consumption. Keynes argues that aggregate consumption
expenditures are determined primarily by current real national income.
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1. Demographic profile
Conceptual Framework
of the respondents
 Age
 INPUT
Gender PROCESS OUTPUT
 Civil Status
 Educational Data analysis and
Attainment
 Length of Service interpretation
 Form of Business
Organization through
2. Level of Financial Proposed Fiscal
Approaches of SMEs application of
 Resource Literacy Program
Utilization statistical tools
 Expenditure
Management
 Operation
Maximization
3. Level of Income
Performance
 Gross Profit
Margin
 Return on Asset
(ROA)
 Return on Equity
(ROE)
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FEEDBACK
Figure 1. Conceptual Paradigm
Statement of the Problem
The primary aim of this study is to determine the impact of financial approaches of small
and medium enterprises to its income performance
1. What is the demographic profile of the respondents in terms of:

1.1 age;
1.2 gender;
1.3 civil status;
1.4 educational attainment;
1.5 length of service; and
1.6 form of business organization?
2. What is the level of Financial Approaches of the respondent in terms of:
2.1 resource utilization;
2.2 expenditure management;
2.3 operation maximization?
3. What is the level of Income Performance of the business in terms of:
3.1gross profit margin;
3.2 return on asset (ROA);
3.3 return on equity (ROE)?
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4. Is there a significant relationship between the demographic profile of the respondents and
the income performance of the business?
5. Is there significant relationship between the financial approaches of the proprietors and the
income performance of the business?
6. What fiscal literacy program can be proposed based on the result of the study?
Objectives of the Study

 To determine the demographic profile of the respondents.
 To evaluate the level of financial approaches of the respondents.
 To evaluate the level of income performance of the business.
 To determine the significant relationship between the demographic profile of the
respondents and the income performance of the business.
 To determine the significant relationship between the financial approaches of the proprietors
and the income performance of the business.
 To determine what fiscal literacy program could be proposed based on the result of the
study.
Hypothesis of the Study
Null Hypothesis
Ho: There is no significant relationship between the financial approaches of the proprietors and
the income performance of the business.
Significance of the study
The research will provide better understanding about the impact of Financial Approaches of
Small and Medium Enterprises to its Income Performance: A Basis for Fiscal Literacy Program.
Thus, the findings of the study will reflect to the benefits of the following:
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Small and Medium Enterprise Proprietors. This research will equip the proprietors, managers,
accountants, and other related positions of small and medium enterprises by encouraging them to
have proper keeping of accounting records which is a greater priority in the objectives of their
business. It will also help the owner with making decisions properly for the business to increase its
financial competence with the society. It also enables a proprietor to determine which approaches
is best suitable for their business operation.
The Government. This research will aware the government officials to give priority in enhancing
financial literacy on the city on every individual for the improvement of accounting practices of
the owners/managers by providing programs that will
The Community. This research will help every individual in the community to be aware of
possible programs to be implemented about financial literacy in the city for them to know the
adjustment to be made in their business in order to determine which financial approaches is the
most applicable to use for their businesses.
The Future Researchers. This will help them broader their knowledge as they will be using this
study as references for their future research. This will also help them find ways on how to improve
the result of this study.
Scope and Delimitation of the Study
Small and Medium Enterprises covers a large percentage of businesses in the country that
contributes to the development and progress of the economy. Hence, this study focuses on the
impact of financial approaches of small and medium enterprises to its income performance. The
outcome would be based on the questionnaires, literatures and studies reviewed and provided in
measuring the impact financial performance on income performance.
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The target respondents of the study will be limited only to the extent of the proprietors, managers,
accountants, and other related positions of small and medium enterprises, specifically retailing
industry, in the City of Cabuyao, Laguna. The demographic profile will focus to the age, gender,
civil status, educational attainment, length of service, and form of business organization.
Definition of Terms
Expenditure Management – It refers to the systems deployed by a business to process, pay, and
audit employee-initiated expenses. These costs include, but are not limited to, expenses incurred
for travel and entertainment. Expense management includes the policies and procedures that
govern such spending, as well as the technologies and services utilized to process and analyze the
data associated with it.
Financial Management Approaches- It refers to the planning, organizing, directing and

controlling the financial activities such as procurement and utilization of funds of the enterprise. It
means applying general management principles to financial resources of the enterprise.
Gross Profit Margin – It refers to a financial metric used to assess a company’s financial health
and business model by revealing the proportion of money left over from revenues after accounting
for the cost of goods sold (COGS). Gross profit margin, also known as gross margin, is calculated
by dividing gross profit by revenues. Also known as “gross margin”. Calculated as: Gross profit
Margin = (Revenue – Cost of Goods Sold)/Revenue.
Medium Scale Enterprises – It refers to the result from the slow and steady growth that results
from a successful small business. As a company earns more revenue, it sets aside the capital
needed for buildings, equipment and more employees, eventually bridging the gap between small
business and large corporations.
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Operation Maximization – It refers to the administration of business practices to create the

highest level of efficiency possible within an organization. It is concerned with converting
materials and labor into goods and services as efficiently as possible to maximize the profit of an
organization.
Performance - It refers to the ability of a business to earn a profit. A profit is what is left of the
revenue a business generates after it pays all expenses directly related to the generation of the
revenue, such as producing a product, and other expenses related to the conduct of the business
activities.
Resource Utilization – It refers to the process of making the most of the resources available in
order to achieve the objective of a business.
Return on Asset (ROA) – It refers to an indicator of how profitable a company is relative to its
total assets. ROA gives an idea as to how efficient management is at using its assets to generate
earnings. Calculated by dividing a company’s annual earnings by its total assets, ROA is displayed
as a percentage. Sometimes this is referred to as “return on investment”. The formula for return on
asset is: Return on Assets = Net Income/Total Assets.
Return on Equity (ROE) – It refers to the amount of net income returned as a percentage of
shareholders equity. Return on equity measures a corporation’s profitability by revealing how
much profit a company generates with the money shareholders have invested. ROE is expressed as
a percentage and calculated as: Return on Equity = Net Income/Shareholder’s Equity.
Small Scale Enterprises - It refers to a privately owned and operated business, characterized by a
small number of employees and low turnover. A small enterprise usually only shares a tiny
segment of the market it operates in.
SMEs – It refers to any business activity or enterprise engaged in industry, agribusiness and/or
services, whether single proprietorship, cooperative, partnership or corporation whose total assets,
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inclusive of those arising from loans but exclusive of the land on which the particular business
entity's office, plant and equipment are situated (Section 1. Sec. 3 of Republic Act No. 6977).
Chapter 2
REVIEW OF RELATED LITERATURES AND STUDIES
This chapter covers the local and foreign literatures and studies related to the topic and gives
further information about financial literacy and profitability. It will help them further understand
the concepts through review of related literature and studies.
Foreign Literature and Studies
SMEs bring innovation into the economy. Innovation sits at the heart of what can make
SMEs so successful despite the harsh economic climate. Because of their size, SMEs are often
much better at identifying and embracing new trends in the industry and, therefore, driving the
innovation within their respective sectors. This allows SMEs to be pioneers in emerging
technologies, paving the way for bigger and braver investments. A lack of innovation is bad news
for any economy. A thriving SME ecosystem ensures that products and services don’t fall behind
the competition and that the companies are in fact able to make a difference on the market. SMEs
can be much more adaptable to change than larger and more complex organizations. Because of
this adaptability, SMEs arguably have a better chance of withstanding difficult economic
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conditions and they are faster at recovering from crises. In overcoming the downturns, these firms
can maximize and stimulate competition, which is essential for putting the current economic
lethargy behind us. Such adaptability also brings more balance to the economic growth of the UK
and ensures that local communities participate in stimulating growth (“The Importance of SMEs”,
2016).
Businesses use different approaches for business operation. Hence, the material
management concept is based on the potential advantages to be obtained from controlling the flow
of materials and goods from supplier through stores and production to dispatch. The overall
control would thus embrace purchasing, stores, Inventory control, production planning, and
physical distribution. According to Raymond, it is important to achieve organizational goal with
acquisition and utilization of the right quality and quantity material resource used to deliver
service.
Resources integration is a complex dynamic process, is refers to the enterprises of different

sources, different levels, different structure, different content selection, absorbing, configuration of
the resources of the organic fusion, activation etc to make it more strong, flexible, orderly,
systematic, and value, and to reconstruct the original resources system, discard worthless
resources, to form a new system of core resources.
On resources integration process, many scholars put forward different views: Brush (2001)
put forward the enterprise resource development path, namely identification, absorb resources,
personal resources into and utilizing organizational resources. And people think that after the
integration of resources, such as Hitt (2001), should also leverage resource and make it become
the sustainable competitive advantage of enterprise itself, only in this way, enterprise resource
integration to be meaningful, to make contribution for the excess earning of enterprise (Sirmon,
D.G., Hitt, M.A. and Ireland, R.D. (2007)) . Rao Yangde (2006), thinks the resource integration
process consists of three steps: resource identification and selection, resource acquisition and
allocation, and resource activation and integration. In short, the enterprise resource integration
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should include the process of recognition to the tourism resources utilization of resources, while
on the description of this process is slightly different, different scholars usually differ in the
number and name of the activity, but the basic concept is the same.
Resource utilization is to use the configured resources, form a market strong

competitiveness, through play a dual role of resources and capacity to produce products or
services, the process of creating value for customers (Hitt, 2001). Resource utilization is the last
link of the process of resources integration, resources value realization process, is the enterprise
have also enterprise resource integration ability into the process of enterprise performance, is the
key to survival in the market. If resources are not utilized, they have no resources. The resources
obtained are not properly utilized, the ability and efficiency of resource integration can be
reduced, the advantages of the enterprise will not be sustained, and the competitive advantage of
the enterprise will be weakened. Thus, the ability of resources to integrate resources will be
stronger, and its role in corporate performance will be more obvious (Oliver C., 2007).
Material resource management is common to all types of organization. It is basic, because

no organization can operate or survive without it. Thus, the success or failure of any organization
depends on the material resource management and utilization. Material resource management is
said to be that, process of management, which coordinated, supervises and excites the tasks
associated with the flow of materials to, though, and out of an organization in an integrated
fashion. As some studies show, managing material resource has a direct relationship with the
success of the organization. For instance, a study conducted by keitany, revealed that materials
management is a tool to optimize performance in meeting customer service requirements at the
same time adding to profitability by minimizing costs and making the best use of available
resources. However, in many institutions, material resource control is the least respected and most
misunderstood department. Its reputation is related directly to the success of the systems it
attempts to control. Attention usually is drawn to materials department then major issues arise
with part shortages, excess freight, and physical inventory losses. Many countries of our world
were establishing a system for the management and utilization of material resources in different
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organizations to provide quality service and to optimize the profitability. For instance, USA,
Sweden and Denmark have a decentralized system of material resource management. According
to the research conducted by James, in Nigeria Bottling Company, there is a positive significant
relationship between efficient materials utilization and firm success. The implication of this is that
through efficient management and utilization of materials, it is possible to increase a profitability
of a firm. In Ethiopia, material resource management has attention during early years. For
instance, the research conducted by Defaru, revealed that the utilization of educational material
resource in Jimma, secondary Schools was poor, and it needs improvement. Therefore, the need to
conduct a search on this area also comes from the need for better management and utilization of
material resources in an organization. Furthermore, according to the observation of a researcher,
the utilization practice of materials resource in Wollega University needs improvement. This
encourages the researcher to focus on this topic and conduct a research then recommend what
should be done in procurement and property Administration department in Wollega University,
Nekemte campus.
Public expenditure management (PEM) is an approach to public sector budgeting that is

oriented towards achieving socially desired outcomes. PEM asks the following question. What
outcomes do we want to achieve through the budget and what procedures, rules, and processes do
we need to put in place in order to achieve these outcomes? In general, PEM tends to promote the
achievement of three outcomes, namely, aggregate fiscal discipline, allocative efficiency, and
operational efficiency. Aggregate fiscal discipline refers to the alignment of public expenditures
with total revenues (domestic revenues plus a sustainable level of foreign borrowing); roughly
speaking, it means keeping government spending within sustainable limits. In layman’s terms, it
means don’t spend more than what you can afford. Allocative efficiency on the other hand refers
to the consonance of budgetary allocations with strategic priorities: are budgetary resources being
allocated to programs and activities that promote the strategic priorities of the country? Put
simply, is the government spending money on the “right” things? And finally, operational
efficiency refers to the provision of public services at a reasonable quality and cost. The relevant
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question here is whether the country is getting the best buy for its money. The achievement of
these outcomes is plagued by complex, underlying problems. That is why public-sector budgeting
is perhaps the most challenging routine task for any government (ADB, n. d)
Maximizing profit is a common long-term goal for new business owners or managers.
However, they often must work through many constraints, some that they have control over and
others that you don't. The time it takes to build favorable supplier relationships, efficient
operations and a customer base makes short-term profit difficult to achieve. Businesses have costs
for supplies used in operation or products purchased for resale. Manufacturers buy raw materials
for production, and distributors and retailers buy finished goods for resale. These trade channel
members and other business organizations also by supplies for use in operations, including paper,
computers and software. The inability to purchase supplies and products at a relatively low price is
a major constraint to economic profit. The stronger the bargaining power based on the size and
customer base, the better the position to achieve low costs. Companies typically have production
or operational processes to prepare products and services for customers. For manufacturers, this
involves converting raw materials to finished goods. For resellers, this commonly includes storing,
transporting and promoting products to customers. The ability to perform these production
processes efficiently and cost-effectively is critical. Constraints in production include the costs of
labor impacted by the supply of skilled labor and the capacity of available equipment. Optimized
production systems and workflows also contribute. Larger customer markets typically lead to
opportunities for greater sales volume and more revenue. Additionally, a larger customer base
gives you the ability to buy in larger volumes from suppliers, which improves the economies of
scale or cost per unit. While you can select markets to go after, the strengths of the offering and
the level of competition they face constrain the ability to enter certain markets. Along with a
sizable market, they need to generate demand from customers to achieve revenue and high price
points. This requires the provision of a strong value proposition and effective promotional
messaging. Budget constraints are a major hurdle for small businesses trying to attract customers.
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Additionally, if your market has many strong competitors, the ability to attract a significant
number of customers to dictate high prices and revenues is constrained (Kokemuller, n. d).
On the other hand, profitability is the ratio to measure the performance of the company. It
is a main aspect in a company’s financial reporting. The profitability of a company shows a
company's ability to generate earnings for a certain period at a rate of sales, assets and certain of
capital stock. Understanding the determinant profitability is the key factors that helps managers in
developing an effective profitability strategy for their company (Gitman & Zutter, 2012).
According to Yazdanfar (2013), one of the importance precondition for long-term firm
survival and success is firm profitability. The achievement and other financial goals of the firms
are significantly affected by the profitability determinant of the firm. Those factors are important
because it give an effect to the economic growth, employment, innovation and technological
change. The primary goal of the company is to maximize their profitability. Without profitability a
firm could not attract outside capital and the business will not survive in the long run. By knowing
and understand firm profitability, it will give the feedback for the firm. The firm can find a policy
that should be taken to solve the problem and minimize the negative impact for business
continuity.
Gross profit margin is generally important because it is the starting point toward achieving
healthy bottom line net profit. When you have a high gross profit margin, you are a in better
position to have a strong operating profit margin and strong net income. For a newer business, the
higher your gross profit margin, the faster you reach the break-even point and begin earning
profits from basic business activities (Kokemuller, 2007).
Without an adequate gross margin, a company is unable to pay for its operating expenses.
In general, a company's gross profit margin should be stable unless there have been changes to the
company's business model. For example, when companies automate certain supply chain
functions, the initial investment may be high; however, the cost of goods sold is much lower due
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to lower labor costs. Gross margin changes may also be driven by industry changes in regulation
or even changes in a company's pricing strategy. If a company sells its products at a premium in
the market, all other things equal, it has a higher gross margin. The conundrum is if the price is too
high, customers may not buy the product (Gross Profit Margin, 2014).
Gross profit margin is a financial calculation that can tell, in percentage terms, a good deal
about a company's overall financial health. It reveals how much money is left over, after paying
for production, to cover operations, expansion, debt repayment many other business expenses. A
company's gross profit represents the revenue dollars remaining after deducting all costs relating
to the sale of those goods. Small business owners are always looking to improve their gross profit
margins. In other words, they want to decrease their cost of goods sold while increasing sales
revenues. One way of accomplishing this is to increase the price of the product. In order to
increase prices successfully, gauge the economic environment, competition, and the supply and
demand for the product, along with any useful information that can be gathered about customer
base including incomes, spending habits, and credit preferences. Also, decrease the cost of making
product, meaning the variable costs. This might involve decreasing the labor costs, which could
require layoffs or other cost-saving constraints impacting employee goodwill. Decreasing labor
costs in this way, it could affect the quality of the product. Also, decrease the manufacturing
costs with regard to materials, find a supplier for materials that offers them at a less expensive
price, or try to negotiate volume discounts with your current supplier (Peavler, n.d.).
The return on assets compares the net earnings of a business to its total assets. It
provides an estimate of the efficiency of management in using assets to create a profit, and so
is considered a key tool for evaluating management performance.
Expressed as a percentage, Return on Assets identifies the rate of return needed to determine
whether investing in a company makes sense. Measured against common hurdle rates like
the interest rate on debt and cost of capital, Return on Assets tells investors whether the company's
performance stacks up. Compare Return on Assets to the interest rates companies pay on their
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debts: if a company is squeezing out less from its investments than what it's paying to finance
those investments, that's not a positive sign. By contrast, an Return on Assets that is better than
the cost of debt means that the company is pocketing the difference. Similarly, investors can weigh
Return on Assets against the company's cost of capital to get a sense of realized returns on the
company's growth plans. A company that embarks on expansions or acquisitions that
create shareholder value should achieve an Return on Assets that exceeds the costs of capital;
otherwise, those projects are likely not worth pursuing. Moreover, it's important that investors ask
how a company's Return on Assets compares to those of its competitors and to the industry
average. Return on Assets gives investors a reliable picture of management's ability to pull profits
from the assets and projects into which it chooses to invest. The metric also provides a good line
of sight into net margins and asset turnover - two key performance drivers. Return on Assets
makes the job of fundamental analysis easier, helping investors recognize good stock opportunities
and minimizing the likelihood of unpleasant surprises (McClure, 2004).
Return on equity (ROE), is a financial ratio that measures the return generated on
stockholders’/shareholders’ equity, the book or accounting value of stockholders’/shareholders’
equity which reflects the accumulation over time of amounts received by the company from
stock/share issues plus the profits/earnings retained by the company, i.e., not yet distributed in
dividends (Lexicon, n.d.).
The Return on Equity is useful for comparing the profitability of a company to that of other
firms in the same industry. It illustrates how effective the company is at turning the cash put into
the business into greater gains and growth for the company and investors. The higher the return on
equity, the more efficient the company's operations are making use of those funds.
One of the most important profitability metrics is Return on Equity, or ROE for short. ROE
reveals how much profit a company earned in comparison to the total amount of shareholder
equity found on the balance sheet. Shareholder equity is equal to total assets minus total liabilities.
It's what the shareholders "own". Shareholder equity is a creation of accounting that represents the
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assets created by the retained earnings of the business and the paid-in capital of the owners.
Return on Equity is an important measure for a company because it compares it against its peers.
With return on equity, it measures performance and generally the higher the better. Some
industries have a high Return on Equity as they require little or no assets while others require large
infrastructure builds before they generate profit. For this reason, Return on Equity is best used to
compare companies in the same industry. Performance ratios like Return on Equity, concentrate
on past performance to get a gauge on future expectation (Karpin, n.d.).
The biggest weakness of Return on Equity is that it ignores debt. Yes, that’s also its biggest
strength, as we mentioned earlier. See, debt can be friend or foe. Higher debt will, if things go
well, increase a company’s resource base and thereby its profits. Because debt financing is usually
cheaper than equity financing, companies can enhance returns to shareholders by taking on debt in
a sensible proportion. The problem with ROE is that it can’t differentiate between profitability
boosts fueled purely by operational gains and those fueled by added leverage (Early, 2017).
Financial literacy involves the proficiency of financial principles and concepts such as
financial planning, compound interest, managing debt, profitable savings techniques and the time
value of money. The lack of financial literacy or financial illiteracy may lead to making poor
financial choices that can have negative consequences on the financial well-being of an individual.
Consequently, the federal government created the Financial Literacy and Education Commission,
which provides resources for people who want to learn more about financial literacy.
Financial literacy is most broadly defined as the capacity to analyze. Its content is now
being shifted from financial knowledge and understanding to the inclusion of financial skills and
competencies, attitudes and behavior. Nowadays there is consensus that this broader concept is
more relevant. It is still of topical interest how best to define, measure and influence. Holzman
(2010. p.4.) states that there is a great number of interventions with the aim to improve financial
literacy, but rigorous monitoring and evaluation of such intervention is still exception not the rule,
particularly regarding the measurement of impact (Holzmann 2010.p.6).
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Financial literacy can be defined as 'ability to obtain, understand and evaluate the relevant
information necessary to make decision with an awareness of the likely financial consequences'
(Bartelet p.31). Marriott and Mellet (1991) carried on research with the aim to reckon the
managers' adequacy based upon the premise that if managers lack necessary skills their decisions
will be wrong. Mariott and Mellett (1996 p.64) define financial awareness as "the manager's
ability to understand and analyze financial information and act accordingly". They measured the
capacity of examinees to define and calculate a number of accounting measures though the ability
to calculate does not guarantee that one is capable to understand and analyze. Financial literacy
should be linked to the concept of financial intelligence. This is a set of skills that must be held by
all those who want to run their business successfully and to be able to follow and understand the
financial world (Berman & Knight, 2007. p.9). They must be able to read balance sheets and
financial statements of companies and financial institutions and to understand their mutual
relations and influences.
Regarding tenure, the underlying assumption appears to be that dissatisfied workers resign
while satisfied ones stay with the organization (Oshagbemi, 2000a; Hom and Griffeth, 1995). In a
study of the effects of tenure on job satisfaction levels of university teachers, Oshagbemi (2000a)
found tenure to be positively and significantly related to overall job satisfaction. This appears to
bear out the findings of earlier research by Ronen (1978), who suggests that intrinsic satisfaction
in a job is a major contributor to changes in the overall satisfaction of workers over time, where
tenure is related to job satisfaction and dissatisfaction. Other explanations are that workers tend to
adjust their work values to the conditions of the workplace, resulting in greater job satisfaction
(Baldamus, 1961; Mottaz, 1987), or that workers who experience little responsibility, interest,
recognition or achievement are more likely to experience dissatisfaction and leave the
organization (Savery, 1996). Workers with longer service may experience higher satisfaction
because they have found a job that matches their needs (Clark et al., 1996), or find opportunities
for promotion which might lead to higher job satisfaction (Kalleberg and Mastekaasa, 2001).
However, longer tenure in a job may result in boredom and lower levels of satisfaction (Clark et
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al., 1996) and this may be exacerbated by low job mobility and external labour market conditions
(March and Simon, 1958; Hom and Kinicki, 2001; Trevor, 2001).
Local Literature and Studies
Given their dynamic and productive characteristics, small and medium enterprises (SMEs)
are seen as crucial for a country’s economic growth, employment creation and innovation. Their
lack of access to financing has often been cited as one of the major constraints affecting their
performance and competitiveness. Lack of access to financing implies that a substantial number of
SMEs cannot obtain financing from banks and other sources in order to start, innovate, grow and
develop their enterprises (Aldaba, 2011).
Overall, SMEs face numerous constraints to further growth and productivity, including
credit constraints, cumbersome registration procedures and strict regulatory environments, and
other challenges related to an economic playing field that is not level between large and small
firms. SMEs, especially start-ups, have lower probabilities of survival than larger firms, leading to
high rates of market entry and exit across nearly all economic sectors.
To go beyond survival and actually compete, SMEs will need to undergo successful
business transformation in various dimensions of their operations—spanning enhanced
entrepreneurial skill, innovation in process and product development, more successful
collaboration across SMEs and with larger firms, and improved crisis resilience among other
factors (Mendoza and Melchor, 2014).
Small and medium-sized enterprises (SMEs) account for over 95% of firms and 60%-70%
of employment and generate a large share of new jobs in OECD economies. They have specific
strengths and weaknesses that may require special policy responses. As new technologies and
globalization reduce the importance of economies of scale in many activities, the potential
contribution of smaller firms is enhanced. However, many of the traditional problems facing
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SMEs – lack of financing, difficulties in exploiting technology, constrained managerial

capabilities, low productivity, regulatory burdens – become more acute in a globalized,
technology-driven environment.
The Philippines appeared to be flush with good news, having made headway in various
global economic and governance indices. In 2011 alone, this Southeast Asian country managed to
climb up ten whole places in the World Economic Forum’s Global Competitiveness Index—one of
the highest jumps tracked in the 2011 index—as well as five places in Transparency
International’s Corruption Perception Index. Efficient public expenditure management is at the
heart of this drive for change. After all, the way government manages public funds has an
immediate impact on its ability to deliver critical goods and services to its constituents. For the
longest time, the national budget and its attendant processes were at the mercy of too many
competing interests, underpinned by a systemic culture of patronage. This enabled an exclusive
group of oligarchs, clans and cronies to exert their influence over public resource management,
allowing them to effectively retain control over the distribution of wealth and economic
opportunity in the country. This, of course, yields devastating results. A firmly established system
of patronage will ultimately give way to unjust relations of inequity and dependence, where the
privileged stand to gain more and the disadvantaged remain shackled to poverty. In this light, fund
management reforms in the Philippines should focus on restoring the government’s role as a fair
mediator of competing interests and an effective and impartial redistributor of wealth. The role of
the Department of Budget and Management sounds simple enough: to ensure that each and every
peso counts in improving socio-economic conditions for all Filipinos, particularly the poor. But
fund management is naturally more complex than that, and its effectiveness should be measured
against how it achieves three imperatives, the first one being aggregate fiscal discipline—utilizing
resources in a strategic way so that government is able to spend within its means. Secondly, fund
management effectiveness should be measured against allocative efficiency, or how the allocation
of scarce public funds can be aligned with a strategic socio-economic development plan. It’s a no-
brainer: government must spend on the right priorities. Thirdly, operational effectiveness is key.
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Public goods and services must be provided at the most reasonable cost and lead to maximum
benefit so that value-for-money is ensured (Abad,2012).
Establishing “financially inclusive ecosystems” (Ehrbeck, Pickens, and Tarazi 2012)

wherein financial markets provide more people, especially low-income clients, with a broad array
of financial products and services at lower costs has become a rising global concern. The
Consultative Group to Assist the Poor (CGAP) and the World Bank estimate that around 2.7
billion adults worldwide do not have access to credit, insurance, or savings with a bank or other
formal institution (Ehrbeck, Pickens, and Tarazi 2012). CGAP (2011a) has stressed the importance
of access to formal financial services for the billions of people around the world who currently
lack adequate access. Several studies have argued that financial inclusion empowers the poor to
manage their finances and reduce their vulnerability to financial distress, debt, and poverty. In the
Philippines, the government has identified financial inclusion as an important strategy, among
others, for inclusive growth (Philippine Development Plan 2011–2016). The key issues are why
formal financial systems are not inclusive, and how can they be made inclusive of the poor. To
address these issues, policy makers and financial institutions try to foster comprehensive
approaches that can overcome supply- and demand-side barriers to financial inclusion. Two broad
types of barriers are reported in the literature: supply-side and demand-side barriers. Supply-side
barriers consist of high transaction costs, information asymmetry, and poor regulatory frameworks
that hinder the quantity and quality of financial products and services that are accessible by the
poor. Demand-side barriers constitute a range of factors that have effectively excluded individuals,
especially the poor, from accessing financial services—socioeconomic and cultural elements,
challenges posed by the lack of formal identification systems, and low levels of financial literacy
in addition to the absence of appropriate consumer protection mechanisms (Alliance for Financial
Inclusion 2010). Other factors that drive exclusion of the poor from financial services are a lack of
awareness of available services, inappropriateness of certain services to the needs of the low-
income sectors, and the risks of dealing with poor customers (ESCAP 2014). This paper discusses
the current status of financial inclusion, education, and regulation in the Philippines and some
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measures to foster financial inclusion. Financial inclusion is a major policy issue, which implies
the importance of financial literacy to educate the poor on how to manage their finances, and
financial regulation to ensure financial stability amidst the growing number of financial
innovations designed to reach the poor. Bangko Sentral ng Pilipinas (2013: 1) defines financial
inclusion as “a state wherein there is effective access to a wide range of financial services for all
Filipinos.”
One of the most frequently used tools of financial ratio analysis is profitability ratios which
are used to determine the company's bottom line and its return to its investors. Every firm is most
concerned with its profit. Profitability ratios show a company's overall efficiency and
performance. So, it will help provide feedback for the management decision for the long-term
success of the company (Zutter & Gitman, 2012).
Measuring profitability is the most important measure of the success of the business because
a business that is not profitable cannot survive (Hofstrand) Profitability can be measured either
from accounting perspectives or from economic perspectives. According to accounting
perspectives, profit is measured as excess revenue over expenses for a transaction (Stickeny &
Weil; Edmonds, McNair, Millam & Olds). In other words, the accounting definition of profit can
be defined as net income gained for a given transaction. It can be further expressed as ratio of net
income over financial revenue. Other studies have used more informative measures by using net
income over assets, also known as return on assets (ROA). Depending on the objective of the
research and the context, the net income to equity ratio is sometimes also used as a measure of
profitability (Nyamsogoro, 2010). According to economic perspectives, profit is viewed as a net
income after transactions plus the opportunity cost of the resources used to generate it (Bodie,
Merton & Cleeton).
Within the accounting approach we could use return on assets or return on equity or both.
However, since some of the SMEs are funded mainly by external loans and others are funded
mainly by equity, this study will use return on assets as a measure of profitability to avoid
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overcompensating the SMEs with favorable access to external financing. In theory, financial
institutions including microfinance generate revenue from the loans, non-interest fees and other
services such as insurance, money transmission, investing and factoring services (Nyamsogoro,
2010). Due to the promising nature of the SME, the major sources of income come from interest
income and non-interest income. Other services such as insurance, money transfer and money
market investments are limited or virtually non-existent. From a management perspective,
understanding the profitability patterns of SMEs and microfinance is increasingly becoming an
important endeavor since it is a crucial part of the sustainability equation of the industry. Also,
such information is important for industry regulators and shareholders for monitoring and
evaluation of the industry performance.
Financial literacy is the most important component of the Philippines financial inclusion
policy. The Philippine financial literacy program is comprehensive; it covers all sectors from
policymakers, regulators, microfinance providers down to the clients. It is a continuing activity for
many government institutions (Beltran, 2016).
Based on the financial literacy program established by the government included in

Microfinance Program, it should cover everyone, all from ages 5 to 100. They have financial
education in the schools, lectures for overseas Filipino workers who, as a group, remit US$28
billion annually, and lectures on financial market for young people who make up 1.3 million
employees of the BPO (Business process outsourcing) sector who, as a group, generate about
US$25 million in revenues annually.
Financial literacy should include a listing of financial (stocks, bonds, insurance and mutual
funds) products available in the market because these should compete on equal footing with
consumer products for the investor’s money.
If the financial literacy program succeeds, financial stability is enhanced because

stakeholders make rational decisions and manage their funds and businesses well. They are also
protected from fraudulent transactions and dubious deals. Regulators, with the assistance of local
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governments, can check on the activities of regulated entities. Clients who are well informed of
their rights can access the alternative dispute mechanisms offered by regulators to settle
complaints.
Financial stability, in turn, fuels economic growth. Using the 50.8% gross savings-GDP
average of the Philippines from 2005 to 2015 as a benchmark (World Bank data), a 10%
improvement in the efficiency of financial management could boost the country’s GDP growth by
5 percentage points.
On 2016, Bangko Sentral ng Pilipinas (BSP) released the national strategy for financial
inclusion stating that while institutions strive to broaden financial services, financial literacy
should also complement such initiatives.
As per Standard & Poor’s (S&P) Ratings services survey last year, only 25% of Filipinos
are financially literate. Meaning, about 75 million Filipinos have no idea about inflation, risk
diversification, insurance, compound interest and even the idea of bank savings.
Synthesis of Related Literature and Review
Different literatures and studies showed relationship between financial approaches and
income performance and importance of financial literacy as well. Thus, the review is divided into
two parts: Foreign Literature and Studies and Local Literature and Studies.
The foreign and local literatures briefly discuss the definition of financial approaches that
business uses that affect its income performance. It also discusses about different characteristics of
financial literacy, small and medium enterprises and profitability of every business as stated by
different authors and publications. The foreign and local studies show findings about the issues
regarding our variables. These studies provide statistics on related topics that will serve as guide
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and reference in this research and will provide a wider overview on financial approaches of SMEs
and its performance.
Based on these studies and literatures, different business financial approaches vary from
different business. These approaches help the proprietors have a better grip of controlling the
business and help them set the goals of the business. These can sort supplies or inventories and
build a favorable relationship with the suppliers and achieve socially desired outcomes that can
attract more customers or clients. Financial approaches have a strong impact on making decisions
investment and controlling cash outflow of the business. Some articles states that profitability is
one of the determinant of the survival and success of a business. It can also be the basis of an
entity if it achieves its goals or not. A number of these literature states the connection between
financial approaches and income performance of an entity in financial terms.
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Chapter 3
RESEARCH METHODOLOGY AND DESIGN
This chapter presented the methodological procedures used in gathering the needed information
for relevant quantitative data. It focuses on the following topics: the research design, respondent,
population and sampling techniques, research instrument and validation, data gathering
procedures, evaluation and scoring, and statistical treatment.
Research Design
This study focused on the impact of financial approaches of small and medium enterprises
to its income performance. The researchers used descriptive method of research to determine the
relationship between financial approaches of the respondents and the level of income performance
to gather the data. Survey questions were used as part of the descriptive method of research, where
it answers the questions what, why, where and how. Descriptive research is a study designed to
depict the participants in an accurate way. More simply put, descriptive research is all about
describing people who take part in the study.
Descriptive research can be explained as a statement of affairs as they are at present with
the researcher having no control over variable. Moreover, “descriptive research may be
characterized as simply the attempt to determine, describe or identify what is, while analytical
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research attempts to establish why it is that way or how it came to be” (Ethridge, 2004).
Descriptive research is “aimed at casting light on current issues or problems through a process
of data collection that enables them to describe the situation more completely than was possible
without employing this method” (Fox and Bayat, 2007).
Respondents of the Study
The respondents of the study were composed of Small and Medium Enterprises in the City
of Cabuyao, Laguna. Embodied are the proprietors, managers, accountants and other related
positions. The whole population of eighty-four (84) small and medium enterprises is located in the
City of Cabuyao, Laguna but come up only to twenty (20) small and medium enterprises as
respondents of the study.
Research Instrument and Validation
The researchers used survey questionnaires as an instrument in gathering the needed

information. The survey questionnaire consists of structured or closed questions in order the
answers to be precise and accurate.
To validate the reliability of the survey questionnaire, it was shown to some research and
business professors. The survey questionnaires consisted of three parts. The first part includes
general information of the respondents such as age, gender, civil status, educational attainment,
length of service, and form of business organization. The second part was to determine the
financial approaches of the businesses. The last part was to obtain information and data analysis
on how different financial approaches affects the income performance of small and medium
enterprises in the City of Cabuyao, Laguna.
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The researchers will also use books, journals, networking sites and other references
suitable to help them analyze the review of related literature and studies that will serve as the
foundation in establishing this study.
Data Gathering Procedure
The researchers requested for the copies of the list of registered small and medium
enterprises from Business Permit and Licensing Office (BPLO) of Cabuyao City Hall in order to
know the total number of the small and medium enterprises in the City of Cabuyao, Laguna. The
researchers have distributed the questionnaires to the proprietors of Small and Medium Enterprises
personally. The researchers helped the respondents in answering the given questionnaires for them
to understand every question clearly. After the questionnaires had been answered, the researchers
have collected and tabulated the data. The gathered information has been analyzed carefully and
presented in graphs and tables.
Evaluation and Scoring
The survey questionnaires were used as the main data-gathering tool for this study. The
questionnaires are divided into three parts: the first part addresses the demographic profile of the
respondents, the second part will determine the level of financial approaches of the respondents,
and the last part focuses in determining the level income performance of small and medium
enterprises.
The responses on the second part of the statement of the problem were presented using the
following rating scale:
Rating Scale Verbal Interpretations Assigned Points
5 Strongly Agree 4.20-5.00

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4 Agree 3.40-4.19
3 Undecided 2.60-3.39
2 Disagree 1.80-2.59
1 Strongly Disagree 1.00-1.79
Questions regarding the level of income performance of the business were presented through the
stated rating scale:
Rating Scale Frequency Level Verbal Interpretations Assigned Points
5 Always Excellent 4.20-5.00
4 Often Very Satisfactory 3.40-4.19
3 Sometimes Satisfactory 2.60-3.39
2 Rarely Fair 1.80-2.59
1 Never Needs Improvement 1.00-1.79
Statistical Treatment of Data
The following were the treatment of the study:
The Percentage (P) is a display of data that specifies the percentage of observations that exist for
each data point or grouping of data points. It is a particularly useful method of expressing the
relative frequency of survey responses and other data. It will be used to describe the profile of the
respondent.
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The Weighted Mean (x) is a mean calculated by giving values in a data set more influence
according to some attribute of the data. It is an average in which each quantity to be averaged is
assigned a weight, and these weightings determine the relative importance of each quantity on the
average. It will be used to determine the average responses on the questions for determining the
level of financial literacy of the respondents.
The Pearson’s correlation coefficient is the test statistics that measures the statistical
relationship, or association, between two continuous variables. It is known as the best method of
measuring the association between variables of interest because it is based on the method of
covariance. It gives information about the magnitude of the association, or correlation, as well as
the direction of the relationship.
Chapter 4
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
This chapter includes the presentation, analysis and interpretation of data gathered in this
study. The order of the presentation is based on the sequence of the statement of the problem. The
survey questionnaires are consisted of fifty-six (56) questions divided into three sets namely:
demographic profile, financial approaches (research utilization, expenditure management, and
operation maximization), and income performance (gross profit margin, return on assets, and
return on equity).
1. The demographic profile of the respondents in terms of:
1.1 Age
Table 1.1
The Frequency and Percentage Distribution of the Respondents According to Age

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INDICATORS FREQUENCY PERCENTAGE (%) RANK
20 years old and below 3 15% 3.5
21-30 years old 8 40% 1
31-40 years old 6 30% 2
41 years old and above 3 15% 3.5
TOTAL 20 100%
The Table 1.1 presents the frequency and percentage distribution of the respondents
according to age. Based on the responses, forty (40) percent are ranging in between twenty-one
(21) to thirty (30) years old; thirty (30) percent are ranging in between thirty-one (31) to forty (40)
years old ;and fifteen (15) percent are ranging in between both forty-one (41) years old and above
and twenty (20) years old and below.
1.2 Gender
Table 1.2
The Frequency and Percentage Distribution of the Respondents According to Gender
Male 12 60% 1
Female 8 40% 2
TOTAL 20 100%
As shown in the Table 1.2 presents the frequency and percentage distribution of the
respondents according to gender. Based on the responses, sixty (60) percent are Male while forty
(40) percent are Female.
1.3 Civil Status
Table 1.3
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The Frequency and Percentage Distribution of the Respondents According to Civil Status
Single 9 45% 2
Married 11 55% 1
Widowed 0 - -
Separated 0 - -
TOTAL 20 100%
Table 1.3 presents the frequency and percentage distribution of the respondents according to
civil status where out of twenty (20) respondents, eleven (11) or fifty-five (55) percent are Married
and nine (9) or forty-five (45) percent are Single.
1.4 Educational Attainment
Table 1.4
The Frequency and Percentage Distribution of the Respondents According to Educational Attainment
High School Graduate 3 15% 3
College Undergraduate 5 25% 2
Associate, 2-year or Technical Degree 2 10% 4
College Graduate or Professional 10 50% 1

Degree
Master’s Graduate 0 - -
Doctorate Units 0 - -
TOTAL 20 100%
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As shown in the Table 1.4 presents the frequency and distribution of the respondents
according to their educational attainment. Based on the responses, fifty (50) percent of the
respondents are College Graduate or Professional Degree; twenty-five (25) percent are College
Undergraduate; fifteen (15) percent are High School Graduate; and 10 (10) percent are Associate,
2-years or Technical Degree.
1.5 Length of Service
Table 1.5
The Frequency and Percentage Distribution of the Respondents According to Length of Service
Below 1 year 5 25% 2
1-5 years 10 50% 1
6-10 years 1 5% 5
11-15 years 2 10% 3.5
16-20 years 0 - -
More than 20 years 2 10% 3.5
TOTAL 20 100%
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The Table 1.5 presents the frequency and distribution of the respondents according to their
length of service. Based on the responses, fifty (50) percent of the respondents are ranging from 1-
5 years; twenty-five (25) percent are ranging below 1 year; ten (10) percent are ranging both from
11-15 years and more than 20 years; and five (5) percent are ranging from 6-10 years.
1.6 Form of Business Organization
Table 1.6
The Frequency and Percentage Distribution of the Respondents According to Form of Business
Organization
Sole Proprietorship 2 10% 3
Partnership 7 35% 2
Corporation 11 55% 1
TOTAL 20 100%
The Table 1.6 presents the frequency and distribution of the respondents according to their
form of business organization. Based on the responses of the respondents, fifty-five (55) percent
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are Corporation; thirty-five (35) percent are Partnership; and ten (10) percent are Sole
Proprietorship.
2. Level of financial approaches of the respondents
2.1 Resource Utilization
Table 2.1
Assessment of the respondents on the level of financial approaches in terms of Resource

Utilization
RESOURCE UTILIZATION WEIGHTED VERBAL

MEAN INTERPRETATIONS
1. Purchase material resources in some 4.45 Strongly Agree
sections regularly.
2. Select suppliers with regards to materials is 4.35 Strongly Agree
quick and reliable.
3. Assess material resources in the 3.90 Agree

organization.
4. Identify and store materials based on their 4.40 Strongly Agree
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items.
5. Request for purchase material resource for 4.30 Strongly Agree

your department is in efficient specification.
6. Administer the trading of unserviceable 4.50 Strongly Agree
materials to generate income for future
purposes.
7. Invest in training to improve 4.45 Strongly Agree
quality and efficiency.
8. Recruit right people to the right jobs. 4.50 Strongly Agree
9. Coordinate with the budget department with 4.60 Strongly Agree

the additional allocation of fund for material
resources.
AVERAGE WEIGHTED MEAN 4.37 Strongly Agree
4.20-5.00 Strongly Agree, 3.40-4.19 Agree 2.60-3.39 Undecided, 1.80-2.59 Disagree, 1.0-1.79
Strongly Disagree
Presented in Table 2.1 is the Level of Financial Approaches of the respondent in terms of
Resource Utilization.
The results show that the respondents strongly agree to coordinate with the budget
department with the additional allocation of fund for material resources (X=4.60); purchase
material resources in some sections regularly, administer the trading of unserviceable materials to
generate income for future purposes, invest in training to improve quality and efficiency, recruit
right people to the right job (X=4.45); identify and store materials based on their items (X=4.40);
select suppliers with regards to materials is quick and reliable (X=4.35); and request for purchase
material resource for your department is in efficient specification (X=4.30).
Meanwhile, the results also showed that the respondents agree that they assess material
resources in the organization (X=3.85).
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The over-all weighted mean is 4.37 which is interpreted as “Strongly Agree”. This implies
that based from the respondents’ assessment, resource Allocation is one the financial approaches
to income performance.
2.2 Expenditure Management
Table 2.2
Assessment of the respondents on the level of financial approaches in terms of Expenditure

Management
EXPENDITURE MANAGEMENT WEIGHTED VERBAL

1.Consider choosing the best way of delivering 4.30 Strongly Agree
services and products or carrying out operations.
2. Plan the contingency budget of those who 4.20 Strongly Agree
review and approve them.
3. Review your inventory and determine which 4.20 Strongly Agree
items are not selling as well as other products.
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4. Set the authority to approve all expenditures, 4.35 Strongly Agree

and restrict others using automated entitlements,
authorization and spending limits, particularly
for strategic or high-value expense categories.
5. Use of operational plan to forecast or adjust Strongly Agree
expenses for resource requirements during the 4.50
year.
6. Advice from experts on the financial viability 4.25 Strongly Agree
of proposals involving significant expenditures.
7. Reflect good cash management practices by 4.45 Strongly Agree
deciding wisely.
Strongly Disagree
Expenditure Management.
The results show that the respondents strongly agree with the use of operational plan to
forecast or adjust expenses for resource requirements during the year (X=4.50); reflect good cash
management practices by deciding wisely (X=4.45); set the authority to approve all expenditures,
and restrict others using automated entitlements, authorization and spending limits, particularly for
strategic or high-value expense categories (X=4.35); consider choosing the best way of delivering
services and products or carrying out operations (X=4.30); advice from experts on the financial
viability of proposals involving significant expenditures (X=4.25); and plan the contingency
budget of those who review and approve them and review your inventory and determine which
items are not selling as well as other products (X=4.20).
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The over-all weighted mean is 4.32 which is interpreted as “Strongly Agree”. This implies
that based from the respondents’ assessment, Expenditure Management is one of the financial
approaches to income performance.
2.3 Operation Maximization
Table 2.3
Assessment of the respondents on the level of financial approaches in terms of Operation Maximization
OPERATION MAXIMIZATION WEIGHTED VERBAL

1. Implement the operations manual to help the 4.40 Strongly Agree
organization reduce waste.
2. Operations Management would provide data Strongly Agree
that would improve the organization’s decision- 4.50
making ability.
3. Operations Management would improve 4.45 Strongly Agree
traceability and regulatory compliance.
4. Having the expertise and resources available to 4.40 Strongly Agree
operationalize new facility project on the targeted
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timeline.
5. Planning would rely on historical sales data to Strongly Agree
forecast future plans. 4.35
6. Cancel unnecessary subscriptions and services Strongly Agree

and reduce costs on items such as paper with the 4.50
efficient use of e-mail.
7. Consider using mobile computing sources, web Agree
meetings and other virtual collaborations to save 4.15
on travel costs.
Strongly Disagree
Operation Maximization.
The results show that the respondents strongly agree with operations management would
provide data that would improve the organization’s decision-making ability and Cancel
unnecessary subscriptions and services and reduce costs on items such as paper with the efficient
use of e-mail (X=4.50); operations management would improve traceability and regulatory
compliance (X=4.45); and implement the operations manual to help the organization reduce waste
and having the expertise and resources available to operationalize new facility project on the
targeted timeline (X=4.40).
Meanwhile, the results also showed that the respondents agree to consider using mobile
computing sources, web meetings and other virtual collaborations to save on travel costs
(X=4.15).
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The over-all weighted mean of the respondents is 4.39 which is interpreted as “Strongly
Agree”. This implies that based from the respondents’ assessment, Operation Maximization is one
of the financial approaches to income performance.
3. Level of Income Performance of the business in terms of:
3.1 Gross Profit Margin
Table 3.1
Assessment on the level of income performance of the business in terms of Gross Profit Margin
GROSS PROFIT MARGIN WEIGHTED FREQUENCY VERBAL

MEAN LEVEL INTERPRETATION
1. Raise prices on a regular basis. 3.05 Sometimes Satisfactory
2. Goods and services are improved 3.65 Often Very Satisfactory
and offered due to change in
customer preferences.
3. Replace the slower-moving items 4.20 Always Excellent
to accommodate quicker-moving
items.
4. Changes in material price due to 4.55 Always Excellent
inflation, deflation, political unrest,
weather and natural disasters and
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global supply variations are

adjusted.
5. Cost of raw materials or services 4.05 Often Very Satisfactory
reach the budget ceiling of the
company.
6. Take cash discounts from 4.10 Often Very Satisfactory
suppliers.
7. Minimize the waste/errors by 4.45 Always Excellent
training the staff.
8. Change of Inventory Management 4.25 Always Excellent
Method to provide uninterrupted
production, sales, and/or customer-
service levels at the minimum cost.
9. Apply levelized production 3.80 Often Very Satisfactory
principles that requires to consider
past sales history in conjunction with
current trends that determine an
“average” daily amount of product
needed.
AVERAGE WEIGHTED MEAN 4.01 Often Very Satisfactory
4.20-5.00 Excellent (Always), 3.40-4.19 Very Satisfactory (Often), 2.60-3.39 Satisfactory
(Sometimes), 1.80-2.59 Fair (Rarely), 1.0-1.79 Needs Improvement (Never)
Table 3.1 shows the overall performance of manufacturing and retail companies in terms of
Gross Profit Margin. Manufacturing and retail companies were rated to have a very satisfactory
performance. It can be inferred based on the results of the study that gross profit margin is
important to both industry as it is the starting point toward achieving a strong/healthy net income
(Kokemuller, 2007).
The results show that the respondents always adjusts when changes in material price due to
inflation, deflation, political unrest, weather and natural disasters and global supply variations
occurs (X=4.55); minimize the waste/errors by training the staff (X=4.45); change of inventory
management method to provide uninterrupted production, sales, and/or customer-service levels at
the minimum cost (X=4.25); and replace the slower-moving items to accommodate quicker-
moving items (X=4.20).
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Meanwhile, the results also showed that the respondents often take cash discounts from
suppliers (X=4.10); reach the budget ceiling of the company when it comes to cost of raw
materials or services (X=4.05); apply levelized production principles that requires to consider past
sales history in conjunction with current trends that determine an “average” daily amount of
product needed (X=3.80); and improve and offer goods and services due to change in customer
preferences (X=3.65).
On the other hand, the results also showed that the respondents sometimes raise prices on a
regular basis (X=3.05).
The average weighted mean of the respondents is 4.01 which is interpreted as “Very
Satisfactory” performance. This implies that gross profit margin affects the income performance
of the business. Gross margin changes may also be driven by industry changes in regulation or
even changes in a company's pricing strategy (Gross Profit Margin, 2014). Small business owners
are always looking to improve their gross profit margins. In other words, they want to decrease
their cost of goods sold while increasing sales revenues. One way of accomplishing this is to
increase the price of the product (Peavler, n.d.).
3.2 Return on Assets
Table 3.2
Assessment on the level of income performance of the business in terms of Return on Assets
RETURN ON ASSETS WEIGHTED FREQUENCY VERBAL

MEAN LEVEL INTERPRETATIONS
1. Cost allocations to various 4.30 Always Excellent
funding sources are made in
accordance with established
agreements.
2. Maintain an adequate and up-to- 4.45 Always Excellent
date cashbook recording receipts
and payments.
3. Periodic physical inventories of 4.50 Always Excellent
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fixed assets and inventories are

audited.
4. Disposal of asset is approved 4.15 Often Very Satisfactory
and recorded.
5. Utilization of available 4.55 Always Excellent
resources is planned.
6. Determine the level of risk of an 4.25 Always Excellent
asset-related failure.
7. Utilize assets in projects that 4.15 Often Very Satisfactory
create value.
8. Use its idle assets without 3.90 Often Very Satisfactory
additional costs.
9. Use fixed assets at full capacity. 4.30 Always Excellent
10. Dispose all unserviceable and 3.85 Often Very Satisfactory
obsolete equipment at a lower
value.
AVERAGE WEIGHTED 4.24 Always Excellent
MEAN

Return on Asset. Manufacturing and retail companies were rated to have a very satisfactory
performance. It can be inferred based on the results of the study that return on asset is important to
both industry as it gives investors a reliable picture of management's ability to pull profits from
the assets and projects into which it chooses to invest (McClure, 2004).
The results show that the respondents always utilization of available resources is planned
(X=4.55); audit periodic physical inventories of fixed assets and inventories (X=4.50); maintain
an adequate and up-to-date cashbook recording receipts and payments (X=4.45); make cost
allocations to various funding sources in accordance with established agreements and use fixed
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assets at full capacity (X=4.30); and determine the level of risk of an asset-related failure
(X=4.25).
Meanwhile, the results show that the respondents often utilize assets in projects that create
value and dispose assets and recorded (X=4.15); use its idle assets without additional costs
(X=3.90); and dispose all unserviceable and obsolete equipment at a lower value (X=3.85).
The average weighted mean of the respondents is 4.24 which is interpreted as “Excellent”
performance. This implies that return on assets affects the income performance of the business.
Return on Assets makes the job of fundamental analysis easier, helping investors recognize good
stock opportunities and minimizing the likelihood of unpleasant surprises (McClure, 2004).
3.3 Return on Equity
Table 3.3
Assessment on the level of income performance of the business in terms of Return on Equity
RETURN ON EQUITY WEIGHTED FREQUENCY VERBAL

MEAN LEVEL INTERPRETATIONS
1. Retention of operational or 4.15 Often Very Satisfactory
precautionary measures to finance
existing investments.
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2. Choose an investment which is 3.95 Often Very Satisfactory

safe and grows slowly but
steadily, even if it means lower
growth overall.
3. Increase leverage by expanding 4.05 Often Very Satisfactory

the business through wise use of
debt capital.
4. Apply additional funding 4.15 Often Very Satisfactory

requirement in financial
institutions to augment financial
resources.
5. Increase in the ratio of debt to 4.40 Always Excellent

equity of capital structure to
improve financial performance.
6. Achieve saving through cutting 4.15 Often Very Satisfactory

non-profitable business units.
7. Require the outsourcing of 4.20 Always Excellent

some services to save operating
costs.
AVERAGE WEIGHTED 4.15 Often Very Satisfactory

MEAN

Return on Equity. Manufacturing and retail companies were rated to have a very satisfactory
performance. It can be inferred based on the results of the study that return on equity is important
to both industry as it illustrates how effective the company is at turning the cash put into the
business into greater gains and growth for the company and investors. The higher the return on
equity, the more efficient the company's operations are making use of those funds (Karpin, n.d.).
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The results show that the respondents always increase in the ratio of debt to equity of
capital structure to improve financial performance (X=4.40) and require the outsourcing of some
services to save operating costs (X=4.20).
Meanwhile, the results show that the respondents often retention of operational or
precautionary measures to finance existing investments, apply additional funding requirement in
financial institutions to augment financial resources, and achieve saving through cutting non-
profitable business units (X=4.15); increase leverage by expanding the business through wise use
of debt capital (X=4.05); and choose an investment which is safe and grows slowly but steadily,
even if it means lower growth overall (X=3.95).
The average weighted mean of the respondents is 4.15 which is interpreted as “Very
Satisfactory” performance. This implies that return on equity affects the income performance of
the business. With return on equity, it measures performance and generally the higher the better.
Some industries have a high Return on Equity as they require little or no assets while others
require large infrastructure builds before they generate profit (Karpin, n.d.).
4. Significant Relationship of the demographic profile of the respondents and income

performance of the Business
Table 4
Test of the Relationship between the Demographic Profile of the Respondents and the Income
Performance of the Business
Demographic Profile Pearson r p-value Decision

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Correlation Value
Age 0.221 0.349 Not Significant with weak

positive correlation
Gender 0.063 0.792 Not Significant with weak

Civil Status 0.045 0.850 Not Significant with weak

Educational Attainment -0.222 0.352 Not Significant with weak

negative correlation
Length of Service 0.198 0.402 Not Significant with weak

Form of Business 0.089 0.709 Not Significant with weak

Organization positive correlation
Table 4 presents the summary of values showing the Pearson r Correlation test and p-value
for the relationship between the Demographic Profile of the Respondents and the Income
Performance of the Business.
The table manifested results showing that there is no significant relationship between age,
gender, civil status, educational attainment, length of service, form of business organization and
the income performance of the business. The computed results yielded with Pearson r Correlation
values and p-values shown in the above table wherein the p-values is less than 0.29, thus, there is
no significant relationship.
5. Significant Relationship of the financial approach of the respondents and income

performance of the Business
Table 5
Test of the Relationship between the Financial Approaches of the Respondents and the Income
Performance of the Business
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Financial Approaches Pearson r p-value Decision

Correlation Value
Not Significant with weak

Resource Utilization -0.017 0.942

Expenditure Management -0.035 0.882

Operation Maximization 0.123 0.606
Table 5 presents the summary of values showing the Pearson r Correlation test and p-value
for the relationship between the Financial Approaches of the Respondents and the Income
Performance of the Business.
The table manifested results showing that there is no significant relationship between
resource utilization, expenditure management, operation maximization, and the income
performance of the business. The computed results yielded with Pearson r Correlation values and
p-values shown in the above table wherein the p-values is less than 0.29, thus, there is no
significant relationship.
Chapter 5
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

This chapter presents a summary of findings, conclusions and recommendations formulated
by the researchers based on the data gathered analyzed and interpreted. This study aimed to
determine the significant relationship between financial approaches and income performance of
the small and medium scale enterprises.
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Findings
The presentation of the following findings in the study was based on the cited problems on the
statement of the problem.
1. Demographic Profile of the Respondents
1.1 Age
8 or 40% of the respondents belong to the age bracket of 21-30 years old, 6 or 30% of the
respondents belong to the age bracket 31-40 years old, and 3 or 15% of the respondents belong to
the age bracket of 20 years old and below and 40 years old above.
1.2 Gender
Among 20 respondents 12 or 20% of them were dominated by male. While the remaining 8
or 40% were female.
1.3 Civil Status
Based on the responses, 11 or 55% of the respondents were already married, while 9 or 45%
were single.
1.4 Educational Attainment
With respect to the respondent’s educational attainment, 10 or 50% of the respondents were
College Graduate or Professional Degree, 5 or 25% were College Undergraduate, the High School
Graduate respondents were 3 or 15%, and 2 or 10% reached Associate 2-year or Technical Degree.
1.5 Length of Service

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Majority of the respondents have worked for 1-5 years which is 10 or 50%, 5 or 25% have
worked below 1 year, 2 or 10% worked within 11-15 years already, and 1 or 5% worked for 6-10
years.
1.6 Form of Business Organization
Out of the 20 respondents 11 or 55% were in a Corporation Organization, 7 or 35% were in

a Partnership Organization, while the remaining 2 or 10% were in a Sole Proprietorship.
2. Level of Financial Approaches of the Respondent
2.1 Resource Utilization
The mean responses coordinate with the budget department with the additional allocation of
fund for material resources (X=4.60); purchase material resources in some sections
regularly, administer the trading of unserviceable materials to generate income for future
purposes, invest in training to improve quality and efficiency, recruit right people to the right
job (X=4.45); identify and store materials based on their items (X=4.40); select suppliers
with regards to materials is quick and reliable (X=4.35); request for purchase material
resource for your department is in efficient specification (X=4.30); and assess material
resources in the organization (X=3.85). The average weighted mean is 4.37. This indicated
that the level of financial approaches of the respondents strongly agrees that resource
utilization affects the business.
2.2 Expenditure Management
The mean responses use of operational plan to forecast or adjust expenses for resource
requirements during the year (X=4.50); reflect good cash management practices by deciding
wisely (X=4.45); set the authority to approve all expenditures, and restrict others using
automated entitlements, authorization and spending limits, particularly for strategic or high-
value expense categories (X=4.35); consider choosing the best way of delivering services
Pamantasan ng
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57
and products or carrying out operations (X=4.30); advice from experts on the financial
viability of proposals involving significant expenditures (X=4.25); and plan the contingency
budget of those who review and approve them and review your inventory and determine
which items are not selling as well as other products (X=4.20). The average weighted mean
is 4.32. This indicated that the level of financial approaches of the respondents strongly
agrees that expenditure management affects the business.
2.3 Operation Maximization
The mean responses operations management would provide data that would improve the
organization’s decision-making ability and Cancel unnecessary subscriptions and services
and reduce costs on items such as paper with the efficient use of e-mail (X=4.50); operations
management would improve traceability and regulatory compliance (X=4.45); implement
the operations manual to help the organization reduce waste and having the expertise and
resources available to operationalize new facility project on the targeted timeline (X=4.40);
and consider using mobile computing sources, web meetings and other virtual collaborations
to save on travel costs (X=4.15). The average weighted mean of the respondents is 4.39.
This indicated that the level of financial approaches of the respondents strongly agrees that
operation maximization affects the business.
3. Level of Income Performance of the Business
3.1 Gross Profit Margin
The average weighted mean of the respondents of 4.01 shows that their income performance
based on Gross Profit Margin has a Very Satisfactory Performance.
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3.2 Return on Asset
based on Return on Assets has an Excellent Performance.
3.3 Return on Equity
based on Return on Equity has a Very Satisfactory Performance.
4. Relationship between Demographic Profile of the respondents and Income Performance of

the business
The results in the Statement of the Problem 4 shows that there is no significant relationship
between age, gender, civil status, educational attainment, length of service, form of business
organization and the income performance of the business. The computed results yielded with
Pearson r Correlation values and p-values shown in the above table wherein the p-values is less
than 0.29, thus, there is no significant relationship.
5. Relationship between Financial Approaches of the respondents and Income Performance

of the business
The results in the Statement of the Problem 5 shows that there is no significant relationship
between resource utilization, expenditure management, operation maximization, and the income
performance of the business. The computed results yielded with Pearson r Correlation values and
p-values shown in the above table wherein the p-values is less than 0.29, thus, there is no
significant relationship.
Conclusions
1. Majority of the respondents belong to the age bracket of 21-30 years old and most of them
were already Married. The findings also shows that most of the respondents were Male and
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are College Graduate or Professional Degree which also shows that they have worked for 1-
5 years because workers with longer service may have experience higher satisfaction
because they have found a job that matches their needs or find opportunities for promotion
which might lead to higher job satisfaction and most of them worked in a Corporation
Organization.
2. a. Based on the above-mentioned findings, the respondents shows a strongly agree result in
financial approaches on resource utilization. Therefore, the results show that the resource
utilization is not only a direct positive relationship between income performance of the
business and that there is indirect positive correlation, therefore, the enterprise after the
utilization of resources make use of these resources for the enterprise to bring efficiency and
output.
b. Based on the above-mentioned findings, the respondents shows a strongly agree result in
financial approaches expenditure management.
c. The respondents shows a strongly agree result in financial approaches on operation

maximization.
3. Based on the above-mentioned findings, the respondents’ income performance when it

comes to Gross Profit Margin and Return on Equity has a Very Satisfactory Performance.
While, their income performance in Return on Assets shows an Excellent Performance.
4. The findings showed that there is no significant relationship between the demographic
profile of the respondents and the income performance of the business in terms of age,
gender, civil status, educational attainment, length of service, and form of business
organization.
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5. The findings showed that there is no significant relationship between the financial
approaches of the respondents and the income performance of the business in terms of gross
profit margin, return on assets, and return on equity.
Recommendations
Based on the above-mentioned findings and conclusions, the researchers recommend the
following:
1. Industries must conduct trainings and learning development programs for accountants,
proprietors, or managers for them to be knowledgeable on how to improve their approaches.
The companies may coordinate in some professional organizations, for example, Philippine
Institute of Certified Public Accountants (PICPA), that conduct free trainings and seminars
about business and accounting matters particularly financial literacy programs.
2. The small and medium enterprises may attend in some learning development programs for
them to improve their financial literacy. Specifically, manufacturing industry must focus in
maximizing their operations and retailing industry should concentrate in managing expenses
properly and maximizing their operations.

Thesis

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Pamantasan ng

In the Philippines, one of the government’s strategies is financial inclusion to provide

 Throughput Accounting (a method for measuring performance and guiding management

A successful Theory of Constraints implementation will have the following benefits:

 Increased profit (the primary goal of TOC for most companies)

 Improved capacity (optimizing the constraint enables more product to be manufactured)

 Reduced inventory (eliminating bottlenecks means there will be less work-in-process)

Capital Structure Theory

 Equivalence in borrowing costs for both companies and investors

 No effect of debt on a company's earnings before interest and taxes

Modigliani and Miller's Capital-Structure Irrelevance Proposition

Modigliani and Miller's Tradeoff Theory of Leverage

Figure 1. Conceptual Paradigm

Statement of the Problem

1. What is the demographic profile of the respondents in terms of:

Objectives of the Study

Hypothesis of the Study

Significance of the study

Scope and Delimitation of the Study

Financial Management Approaches- It refers to the planning, organizing, directing and

Operation Maximization – It refers to the administration of business practices to create the

REVIEW OF RELATED LITERATURES AND STUDIES

Foreign Literature and Studies

Resources integration is a complex dynamic process, is refers to the enterprises of different

Resource utilization is to use the configured resources, form a market strong

Material resource management is common to all types of organization. It is basic, because

Public expenditure management (PEM) is an approach to public sector budgeting that is

Local Literature and Studies

SMEs – lack of financing, difficulties in exploiting technology, constrained managerial

Establishing “financially inclusive ecosystems” (Ehrbeck, Pickens, and Tarazi 2012)

Based on the financial literacy program established by the government included in

If the financial literacy program succeeds, financial stability is enhanced because

Synthesis of Related Literature and Review

RESEARCH METHODOLOGY AND DESIGN

Respondents of the Study

Research Instrument and Validation

The researchers used survey questionnaires as an instrument in gathering the needed

Data Gathering Procedure

Evaluation and Scoring

Rating Scale Verbal Interpretations Assigned Points

5 Strongly Agree 4.20-5.00

1 Strongly Disagree 1.00-1.79

Rating Scale Frequency Level Verbal Interpretations Assigned Points

5 Always Excellent 4.20-5.00

4 Often Very Satisfactory 3.40-4.19

3 Sometimes Satisfactory 2.60-3.39

2 Rarely Fair 1.80-2.59

1 Never Needs Improvement 1.00-1.79

Statistical Treatment of Data

The following were the treatment of the study:

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

1. The demographic profile of the respondents in terms of:

The Frequency and Percentage Distribution of the Respondents According to Age

INDICATORS FREQUENCY PERCENTAGE (%) RANK

20 years old and below 3 15% 3.5

21-30 years old 8 40% 1

31-40 years old 6 30% 2

41 years old and above 3 15% 3.5

1.3 Civil Status

1.4 Educational Attainment

High School Graduate 3 15% 3

College Undergraduate 5 25% 2

Associate, 2-year or Technical Degree 2 10% 4