The rapidly changing nature of today’s external and internal environment continuously creates a demand for business strategy, method improvements and organizational renewal ensure the continued existence in today’s extremely competitive marketplace. Today, businesses are lower continuous heaviness to improve, implement and speedily review their financial management schemes. To behave this, business requirement to prepare and implement financial approaches to manage risks and improve fiscal performance and capabilities as represented in pecking order theory.
According to (Effects of Financial Management Practices on 2013), Organizational performance denotes to how healthy an organization succeeds its market-oriented goals as well as its financial goal. Organizational performance means the achievement of final objectives of the organization as locating out in the strategic plan. Performance can be resolute in diverse behaviors. While there is a range of specific models, major elements of firm near profitability include the characteristic of the industry in which the firm competing the firm’s location relative to its challenges and the excellence or amount of the firm’s incomes.
1.1.2 Management Accounting Practices
When we look up as globally, the American study (Marquina, Einna, and Nuguid n.d.), To fill up the first management accounting revolution, establish (1950s-1980s), known as the modern management accounting period, characterized by the new researchers as a result of which educational accountants provided a new decision-making mechanism for managers. Tasks are every day a managerial and operational level. The purposes of financial management and management accounting practices are to support decision making. The study from western Kenya approved financial management practices and firm performance between micro and small enterprises in Busia town, Kenya. The exact independent of the research was to establish the effects Working capital, managing Cash Flow Administration, asset controlling and financial reportage
On the enactment of the micro and small enterprises. A researcher used descriptive statistics to analysis study with simple random sampling and quantitative questionnaires, by analysis researcher simplify self-administration questionnaire methods. The study was used a sample size of the 88 respondents. To know the relationship between financial management on the firm performance, he was used Working capital management, Cash flow management, Asset management, financial reporting as the independent variables, while Firm performance is a dependent variable. The findings may benefit the government of Kenya, especially industrialization and enterprise development ministry in formulating policies to cushion MSEs against financial crisis arising from poor financial management practices. The study findings may be adopted by MSE development assistance in Kenya in manipulative interferences to improve the growth and development of micro and small enterprises (Town et al. 2017).
According to (Uyar 2010), Practices, the specific objectives of this research were to discover cost and management accounting practices utilized by manufacturing companies operating in Istanbul, Turkey and the findings indicated that companies recognize that traditional management accounting tools still important. Nevertheless, new management accounting practices such as tactical planning, and allocation, pricing seem less significant than traditional ones. Companies use management accounting practice to evaluate their operations. The major findings of the study are suggested the most usually used produce costing technique is job costing, the difficulty in production positions as the maximum standing trouble in product costing; the most broadly used three overhead allocation bases are prime costs, units produced, and direct labor cost; pricing decisions is the greatest significant area everywhere costing information is used; overall mean of the proportion of overhead to total cost is 34.48 percent for all industries; and the supreme central three managing accounting practices are budgeting, planning, and control, and cost-volume-profit analysis (Uyar 2010). The study investigated Cost and Management Accounting These techniques help organizations to plan, direct and control costs and working to accomplish profitably. Today, performance measurement and performance management practices are commonplace in all sectors of industry and business as well as the public sector, together with government departments, non-governmental organization, and charities (Bititchi 2010).
Financial management practice is the function of suitable techniques and idea in processing the historical and predictable economic data of a unit to assist management in establishing a plan for logical economic objectives and in the making of consistent decisions by examining to achieving these objectives.
Management accounting, or managerial accounting, is an established of applying and technique directed at given that managers with financial information to help them make judgments and withstand effective control over organizations resources. These include the technique and concepts required for effective planning, decision making, and choosing amongst substitute business actions and controlling the evaluation and interpretation of performance.
According to (Jennifer and Dennis 2015); The exact objectives of this study were to control effect of working capital management practices, investment practices, financial planning practices, accounting information systems, financial reporting analysis practices on the growth of SME. The finding shows that Building program for SMEs on the issues of financial management practices. Financial managing states to the procedure of managing financial properties, counting management conclusions regarding accounting and financial reporting, predicting, and planning, as well as capital accounting conclusions, which contain decisions whether to lease or buy, and whether to issue debt or equity (Lightbody, 2000). Financial management framework comprises the processes, systems, internal controls and practices relating to the way the department manages its revenues, expenses, assets, liabilities, and contingencies. It also includes its systems for managing risk and monitoring its financial and operational performance, including budget performance and reporting on these functions, both internally and externally.
1.1.3 Financial Performance
Financial performance is a specific portion of in what way well a firm can use an asset from its prinfindingdicipal the way of business and create revenues. This history is also used, the amount of a general measure firm’s general financial wellbeing over a period of time and can be used to associate equal firms across the same industry, there are many diverse ways to measure financial performance, but totally measures should be taken in combination. Line items such as revenue from processes, operating income or cash movement from operations can be used, as well as total element sales (Investopedia).