Influence of financial literacy on profitability of micro-enterprises in Babak Samal Island

Abstract

Understanding financial literacy concepts and recognizing financial instruments is essential for an individual's all financial decisions. The study assess the relationship between financial literacy and profitability of those micro-enterprises in Babak District, Island Garden City of Samal. In conducting this research, a descriptive survey method was employed. The study population was the micro-enterprises operating in the Babak district of Samal. From a total population, a sample of 50 respondents was selected using the random sampling method. The statistical tools used in the study were mean, Pearson-r, and regression analysis. The result showed that financial literacy on the profitability of Micro-enterprises is high. Moreover, the micro-enterprises budgeting, planning, debt management, and savings were very high. The level of profitability in terms of income is low, and asset is very high. Therefore, the study highly recommends that micro-enterprises be made aware of the significance of financial literacy and encouraged to participate in financial literacy. The study found that high levels of financial literacy among micro-enterprises owners led to higher financial performance.