Financial health of handloom micro-entrepreneurial units in Assam: a composite financial health index approach

Purpose This study aims to examine the financial health of handloom micro-entrepreneurial units in Assam by analysing financial performance indicators. It aims to compare the financial performance of handloom micro-entrepreneurial units across different sizes and loom technologies and to assess their financial viability. Design/methodology/approach The study is based on primary data collected from 252 registered handloom micro-entrepreneurial units of eight selected districts across Assam through structured questionnaires. Financial performance is evaluated using the financial indicators of profitability, efficiency and sustainability. To compare across different unit categories based on number of looms and loom technologies, these indicators are converted into standard scores and combined to construct a composite financial health index. Findings The result shows considerable variation in financial health across the different unit size and loom technologies. Very small units operating with one or two looms show the lowest composite financial health Index score, indicating low profitability and inefficient utilisation of resources. Financial performance improves with the number of looms. Larger units show efficient capital utilisation and stable financial conditions. Among loom technologies, fly-shuttle looms show higher profitability due to lower operating costs and faster production. On the other hand, traditional loin looms remains the least commercially viable. Scale of operation is confirmed as a statistically significant determinant of financial health (p = 0.017). Originality/value This study contributes to the literature on rural micro-entrepreneurship by integrating profitability, efficiency and sustainability indicators into a composite financial health index for handloom micro-entrepreneurial units.