Financial Management Practices in Micro, Small and Medium Enterprises-An Exploratory Analysis with the help of Literature Review

The aim of this paper is take the literature reviews of the financial management practices to generate an insight into untouched and neglected area of micro, small and medium enterprises (MSMEs).The previous research studies identified the positive relationship between the financial management practices and MSMEs but no clear relationship established between the various components of Financial Management Practices viz working capital, capital structure and investment practices with profitability. Considering the nature of studies, the researcher selected limited but relevant and important 29 national and international research papers on the basis of non-probability based purposive sampling method. The literature analyzed on the basis of year, location, affiliation of author, aim of research, findings and conclusions. The researcher identified literature gap and developed major hypothesis for focused research studies. The study highlighted the significance of better financial management decisions on the basis of efficient financial management practices which are critical and crucial for the survival, growth and profitability of MSMEs. The study concludes that accounting and financial knowledge, competencies in interpreting the financial statements, owner-managers attitudes and their level of involvement in financial aspects of business largely responsible for the success or failure of MSMEs.