Business Risk Management, Capital Structure and Financial Performance of Small and Medium Enterprises (SME’S) under Uganda women Entrepreneurs’ Association Limited (UWEAL)

Abstract

The study was prompted by the escalating poor financial performance of small and medium enterprises (SMEs) in Uganda as reported by the findings of the Private Sector Foundation of Uganda. SMEs which were registered by Uganda Women Entrepreneurs Association Limited formed the units of inquiry because they were registered and totaled to 157 in number. The study used a cross sectional design which involved both analytical and descriptive analysis, with samples selected using simple random sampling. The research questionnaires were analyzed using the statistical package for social scientists and relationships established using regression models as well as descriptions of the factors affecting the variables using factor analysis. The findings of the study showed a significant and positive relationship between business risk management and financial performance as well as a positive relationship between capital structure and financial performance of SMEs. The overall Adjusted R Square was 19.5% implying that the department variable was explained by the independent variables up to 19.5% and 80.5% of the changes in the dependent variable could be explained by exogenous factors outside the model. The study recommended the need for a proactive business risk management and optimum leverage of the capital structure for investment decisions made by SMEs as well as periodic monitoring and measurement of financial performance at given intervals.