Title:
FINANCIAL ANALYSIS FOR SMALL ENTERPRISE PERFORMANCE MEASUREMENT: CASE OF HARARE, ZIMBABWE

Authors:
Hosho Norbert ,Gumbo Victor and Pamu Emmanuel Mulenga

Abstract:
The study derives from the notion that small enterprises (SEs) could be the drivers of the Zimbabwean economy, after many large companies have either closed down or downsized in the past two decades. This study also constitutes the second phase of the research aimed at examining how the financial performance of small firms is influenced by microfinance services offered by MFIs. The purpose of the current study was to identify financial performance measures (FPMs) currently monitored by Zimbabwean SEs; as well as to examine the financial analysis techniques currently used by Zimbabwean SEs in measuring their financial performance. The research employed the qualitative design, whereby the population for the study comprised the innumerable SEs in and around Harare Central Business District. The researchers purposively sampled twenty SEs from each sector from within the population of SEs operating in Harare on condition that: (1) the SE had obtained microfinance from an MFI and is currently indebted to at least one MFI, (2) The SE meets the operational definition of an SE; that is it has six up to forty employees, annual turn-over of $50 000 to $500 000 and assets valued at between $50 000 to $1 million. The research utilised a questionnaire as the data collection tool. The key findings of the study were that SEs employed the technique of analysing their annual increase in profit before tax as the major technique, followed by growth in annual revenue. Most of the traditional financial analysis techniques in the form of ratios were utilised by most SEs. Overall, SEs in Zimbabwe were found to be depending on traditional techniques; without making meaningful reference to contemporary financial analysis techniques and approaches touted in literature.