WORKING CAPITAL MANAGEMENT STRATEGIES AND FINANCIAL PERFORMANCE OF MSMES IN KERALA

Abstract

Micro, Small, and Medium Enterprises (MSMEs) are crucial drivers of economic development, contributing to employment generation, income distribution, and overall economic growth. However, their success and sustainability largely depend on effective financial management practices. This study explores the working capital management and financial practices of micro and small enterprises in Kannur district, utilizing both primary and secondary data sources. The research highlights the critical role of efficient financial planning, budgeting, and resource allocation in enhancing business stability and growth. It also highlights the importance of financial literacy and the adoption of modern financial tools to optimize financial performance. The findings reveal that many enterprises face challenges in maintaining proper financial records, accessing credit, and managing cash flows effectively. Addressing these gaps through targeted financial training and policy interventions can significantly improve the financial resilience of MSMEs. By strengthening financial management practices, these enterprises can achieve long-term sustainability, contributing to the broader economic development of Kerala.