EFFECT OF FINANCIAL MANAGEMENT PRACTICES ON FINANCIAL PERFORMANCE. A CASE OF ADMA INTERNATIONAL LTD, RWANDA

This study is essential to examine how financial management practices influence the financial performance of ADMA International Ltd in Rwanda, addressing existing gaps in understanding the key factors that drive financial success within the company. The target population comprised 520 employees of ADMA International Ltd Rwanda, with a sample size of 84 respondents selected for the study. Data collection was conducted using structured questionnaires to gather relevant information on financial management practices and performance metrics. The study consulted relevant literature and theoretical frameworks, including the Conversion Cycle Theory, Financial Distress Theory, and Transaction Cost Theory, to underpin the analysis. For data analysis, descriptive statistics such as frequency tables, percentages, means, and standard deviations were employed to summarize the data. Inferential analysis was conducted using Pearson correlation coefficients and multiple regression models, utilizing SPSS version 25.0 to test the relationships between independent variables (working capital management, budgetary control practices, and budget monitoring and evaluation) and the dependent variable (financial performance). Key findings indicated high mean scores for variables: 4.50 for working capital management, 4.69 for budgetary control practices, 4.60 for budget monitoring and evaluation, and 4.65 for overall financial performance. Correlation analysis revealed strong relationships between these practices and financial performance, with correlation coefficients of 0.769, 0.902, and 0.944, respectively. The effects of financial management practices were statistically significant, with p-values less than 0.05, specifically, working capital management (p = 0.000), and budget monitoring and evaluation (p = 0.000), while budgetary control practices did not show a significant effect (p = 0.408).The study concludes that there is a significant positive relationship between financial management practices and financial performance at ADMA International Ltd. Based on these findings, it is recommended that MINICOM encourage greater engagement of citizens in business activities to foster wealth creation. Additionally, Ministry of trade and industry(MINICOM) should regularly provide professional guidelines to enhance ensuring adherence to best practices and improving overall business performance.