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Micro and Small Enterprises (MSEs) have a huge responsibility of promoting economic development of many nations in the world today. Studies from developed nations find financial management practices to contribute immensely to MSEs’ poor business performance. This study establishes the relationship between financial management practices and financial performance of MSEs. Literature suggests that most research on the financial performance of MSEs is based on any one or a combination of the following key theories and frameworks: the Modern Portfolio Theory, the Signalling Model, and the Pecking Order Theory. A cross-sectional descriptive survey research study design was used. The target population of the study was 56, 055 MSEs. The researcher used simple random sampling to arrive at a sample size of 384 licensed MSEs of the total population with at least one respondent in each. Multivariate regression model showed that firms’ overall financial performance was positively affected by the FMPs. The findings specifically showed that capital budgeting and capital structure management practices each had a significant positive effect on the company’s financial performance with WCM practices being the least contributor to the effect. The study found out that WCM is a leading financial management practice among MSEs has a significant negative influence on their financial performance. It is recommended that management of MSEs should put in place the most appropriate financial management practices to help them improve their return on assets.
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