Impact of Financial Literacy on Profitability of Small Scale Enterprises in Nigeria

Abstract:

This research work examined the impact of financial literacy on profitability of small-scale enterprises in Karu, Abuja. The study aimed to analyze whether the level of adoption of financial literacy in record keeping of small-scale enterprises (SSEs) has significant impact on financial performance. A review of related literature was carried out to examine the extent of work done in the field. A carefully structured questionnaire was used to collect data on the level of adoption of financial literacy and also a financial literacy test. A sample of one hundred and fourty eight (148) respondents was used to carry out the study, which encompasses the different strata frequency and percentages used to analyzed data while one-way analysis of variance (ANOVA at 5% level of significance was used in the analysis of the research data. The result shows that the level of adoption of financial literacy by small scale enterprises in Karu is low and that utilization of financial records significantly influences their profitability. It however, found that there is statistically significant relationship between financial literacy and profitability of SSEs in Karu due to the relevance of this study to economic and national development. The study recommends that SSEs should adopt financial literacy in order to improve their profits.