The Effectiveness of Cash Management on Profitability in

the Manufacturing Industry in San Jose City, Nueva Ecija

A Research Proposal
Presented to the Faculty of
PHINMA Araullo University
College of Management and Accountancy

In Partial Fulfillment of the Requirements

in
ACC 116: Accounting Research

PROPONENTS
Bobila, Maria Niña Joyce M.
Colcol, Salvador B.
Diego, Ruby Rose N.
De Leon, Kemly B.
Dumale, Aliyah Cassandra M.
Salinas, Nicole V.
Somera, Erick John R

MARCH 2024
 APPROVAL SHEET

This thesis entitled " The Effectiveness of Cash Management on

Profitability in the Manufacturing Industry in San Jose City,
Nueva Ecija” prepared and submitted by Bobila, Maria Niña Joyce
M., Colcol, Salvador B., Diego, Ruby Rose N., De Leon, Kemly De
Leon B., Dumale, Aliyah Cassandra M., Salinas, Nicole V., Somera,
Erick John R. in partial fulfillment of the requirements for the
degree, Bachelor of Science in Management Accounting has been
examined and is recommended for acceptance and approval for oral
examination.

Jaydeeline D. Catabona
Research Adviser

Accepted and approved in partial fulfillment of the requirements

for the degree, BACHELOR OF SCIENCE IN MANAGEMENT ACCOUNTING

Marvin S. Salviejo, CPA

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 CMA Dean
Research Abstract

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 Acknowledgment
This bachelor's dissertation could not have been possible

without the invaluable support and assistance of those who

extended their help to us, the researchers, enabling us to

complete our research study. We extend our heartfelt thanks to

them.

First and foremost, praise and thanks to God, our Almighty,

for the wisdom, intelligence, and courage to wrap up this

research study and also for his blessings throughout our

research and its successful completion.

The researchers would also like to express their deep and

sincere gratitude to our research adviser, Prof. Jaydee David

Catabona, for her encouragement, hard questions, and the time and

effort that she devoted to reviewing our research study and

providing constructive feedback. Her guidance helped us in all

the research and writing of this study. We would also like to

thank her for her invaluable guidance, compassion, patience,

motivation, and knowledge. The researchers consider it a

privilege and honor to work under her guidance, as her support

and expertise have contributed to the study's current level of

excellence. Their gratitude is a testament to her invaluable

contributions to the

research.
Besides our adviser, we would like to thank Dean Marvin

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Salviejo, CPA, Dr. Manny, and the rest of our CMA faculty for

allowing us the opportunity to conduct our research study among

the micro and small enterprises (MSEs) in San Jose City. Also, to

all business owners who gave their consent for the full

participation of the selected Micro and Small Enterprises (MSEs)

respondents, for sharing their ideas and expertise. Without their

help and full cooperation, our research paper would not be

possible. The researchers are genuinely grateful for your

contribution.

We would like to give thanks and appreciate our respondents'

time and efforts, which contributed to the research study's

successful completion. We also want to express our gratitude for

the time, knowledge, and expertise that you have given us in

shaping the outcomes of this research study.

Lastly, a special thanks to our dearest parents for their

unwavering consideration for the finances, undying support, and

encouragement for all those nights that we’ve spent making the

research study.

V|Page
 Table of Contents

Approval Sheet ................................................

II
Research Abstract ............................................
III
Acknowledgemen................................................ IV
Table of Contents .............................................
VI
CHAPTER 1 ...................................................... 1
Introduction ................................................
1
Review of Related Literature and Studies ....................
3
Theoretical Framework ......................................
11
Conceptual Framework .......................................
13
Statement of the Problem ...................................
16
Hypothesis of the Study ....................................
17
Significance of the Study ..................................
17
Scope and Delimitation of the Study ........................
19
Definition of terms ........................................
19
CHAPTER 2 ..................................................... 21
Research Design ............................................
21

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Research Locale ............................................
24
Respondents of the Study ...................................
25
Sample and Sampling Procedure ..............................
26
Research Instrument ........................................
26
Data Gathering Procedure ...................................
27
Statistical Treatment of Data ..............................
29

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 CHAPTER I

PROBLEMS AND REVIEW OF RELATED LITERATURE

This chapter presented an introduction to the research study and

its problems. It includes the dependent and independent variables

that are used in the study, as well as their significance and

limitations.

Introduction and Background of the Study

The Micro, Small and Medium Enterprises (MSMEs) has a huge

contribution for the growth and development of the Philippine

economy. Their role is not only to provide goods and services but

also to reduce levels of poverty by providing employment

opportunities. More businesses have challenges in managing their

cash and not all Micro and Small Enterprises succeed in managing

their business that leads to insolvency. Many businesses fail

within the first few years of their operation because of the

challenges that they faced. The USA Link System (2023), stated

that the Bureau of Labor Statistics Business Dynamics, 20% of

small businesses fail in the first year, 30% in their second

year, 50% after five years, and 70% of small businesses fail in

their 10th year and one of the reasons why they failed is having

problems in managing their cash.

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 The lifeblood of a business is cash, it is essential to

continue the operations of a business. Cash management has an

important role in the profitability of micro and small

manufacturing industries because it is used to monitor and manage

the inflow and outflow of cash. Some Micro and Small Enterprises

(MSE) in the manufacturing industry encountered dilemmas in

managing their cash. According to Heaslip (2023), 82% of small

businesses fail due to the dilemmas in their cash flow because of

having poor cash management, with the manufacturing industry

being one of the most severely affected. Moreover, Batungbacal

(2023), stated that manufacturing is the largest industry sector

in the Philippines based on gross value added (GVA), which means

the manufacturing industry has the largest total value of goods

and services produced in an economy. That's why it is important

to have knowledge on how to manage cash to avoid bankruptcy and

to have smooth business operations.

This study is able to fill in the gaps in the literature

because there is a lack of local research on the impact of cash

management on profitability in the Philippines, particularly in

industries like manufacturing. Some Micro and Small Enterprises

fail to sustain their growth due to lack of knowledge and

experience to increase their profitability. Some business owners

have problems in increasing their profit because they have poor

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cash management. Having effective cash management is helpful

because it is not only avoiding insolvency but also to reduce the

days in collecting account receivables in order to improve the

stability and profitability of a business.

The research aims to determine the effectiveness of cash

management on profitability in the micro and small manufacturing

industry in San Jose City, Nueva Ecija. The result of this

research will help the micro and small manufacturing industry to

understand and know the importance of having effective cash

management in increasing their profit. The contribution of this

study is to provide insight on how the businesses will increase

their profit and to avoid insolvency using cash management

because the nature of cash management is to ensure the positive

cash flow for smooth operation of a business.

Review of Related Literature and Studies

Local Literature

According to Maria Yanuaria in 2024, cash is one of the

major assets that individuals and businesses utilize to meet

their obligations and invest. Cash management is the process of

collecting and managing cash flows. Individuals and businesses

alike can benefit from proper cash management. It is an important

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factor in ensuring a company's financial stability. Moreover, the

cash flow statement is broken into three parts: operating,

investing, and financing. The operating element of cash

activities varies significantly depending on net working capital,

which is calculated on the cash flow statement as a company's

current assets less current liabilities. The other two portions

of the cash flow statement are more basic and show cash inflows

and outflows related to investment and financing. Moreover, the

practice of effectively managing cash inflows and outflows is

known as cash management. Although it's an essential step for

businesses, small business owners typically don't see the value

in cash management since they don't believe they need it. They

think that large corporations are the only ones that can benefit

from cash management (Yanuaria, 2024). Cash management is advised

for all businesses, small and large, regardless of their size or

age. If the business does it correctly, it will allows an

enterprise to pay down its debt, keep money in reserve, and make

investments for future growth.

Foreign Literature

According to Randy Lasnick (2023), cash management is the

management of profit and other spending funds and how businesses

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manage their financial operations; it includes accounts

receivable, accounts payable, and other short-term investments.

Effective cash management can improve business profitability and

cash flow by reducing operational costs. It is stated that

optimizing cash management helps the business achieve positive

cash flow, effective working capital, and strong financial

health. Any company that wants to succeed must be able to earn

enough money from its operations to pay its debts, repay

investors, expand, and make long-term plans. Without effective

cash management, a business may collapse due to a lack of funds

for continuous or unexpected costs.

Working capital is the difference between a company's

current assets (such as cash, inventory, and accounts receivable)

and current liabilities (such as accounts payable and short-term

debt). It basically signifies the amount of money that is

accessible for a business's daily activities. Keeping track of

this is important, particularly for the manufacturing industry,

where more complex working capital utilization is necessary.

According to Tuovila in 2023, working capital management is a

business strategy designed to ensure that a company operates

efficiently by monitoring and using its current assets and

liabilities to their most effective use. Furthermore, the

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following are the main components to track: cash, accounts

receivable, and accounts payable. and lastly, the inventory.

First, tracking cash and cash needs is the foundation of working

capital. To ensure that the business has enough cash on hand to

pay its debts, this entails controlling the cash flow of the

organization through anticipating demands, keeping an eye on cash

balances, and optimizing cash inflows and outflows. Second,

accounts receivable, which involves managing the credit policies

of the business, monitoring payments from customers, and

improving collection procedures, Third, accounts payable is an

area that businesses may benefit from by negotiating favorable

terms with suppliers, utilizing early payment discounts, and

monitoring payment terms. Lastly, inventory typically ties up our

capital, which is why it is important to only have sufficient

inventory for customer demands. Managing the working capital are

at the core of operating a business. Without sufficient capital

on hand, a company is unable to pay its bills, process payroll,

or invest in growth.

Profitability analysis is the process of assessing a

business's capacity to turn a profit from its operations. It

entails looking at a range of financial indicators, including

cash flow, gross profit margin, operating margin, net profit

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margin, return on assets (ROA), and return on equity (ROE), to

evaluate the profitability of the business and pinpoint

opportunities for development. In order to maximize

profitability, firms can make well-informed decisions on pricing

policies, cost-cutting measures, and resource allocation with the

use of profitability analysis. The primary goal of profitability

in businesses is to ensure the generation of sustainable and

consistent profit over time. Businesses that want to survive for

long-term success need to be profitable because they support a

number of important goals that are essential to their daily

operations. According to DealHub Experts (2023), profitability is

the main reason any business exists; without an excess of revenue

over expenses, it cannot survive.

According to Gauri Kelkar (2023), profitability ratios are

divided into two broad categories. The first is margin ratios,

which help analyze how much profit a business is making or can

make through its sales. Margin ratios typically include gross

profit margin, operating margin, net profit margin, and cash flow

margin. The second is revenue ratios, which indicate the extent

of returns a company can provide its shareholders. In order to

evaluate a business's profitability and efficiency, two crucial

financial statistics are return on equity (ROE) and return on

assets (ROA). Return on equity measures the profit a company

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generates with shareholders' investment, while return on assets

measures the efficiency of a company's use of assets to generate

profit. ROA is calculated by dividing net income by average total

assets, while ROE is calculated by dividing net income by average

shareholders' equity. Both ratios offer insights into how well a

business uses its resources to generate profit.

Local Studies

The study titled "Effect of Cash Management on the Retail

Industry's Financial Performance," conducted by Gabildo et al. in

2022, found that efficient cash management plays a critical role

in the smooth functioning of a business that directly impacts a

number of crucial areas, such as a company's liquidity,

profitability, risk of bankruptcy, and total working capital, and

can significantly reduce the total operating costs. Therefore, it

is essential to manage cash flow efficiently to ensure the

longterm success of any business. The financial performance of

the chosen organizations, evaluated through their return on

assets (ROA), return on equity (ROE), and net profit margin

(NPM), is positively correlated with their cash ratio. Increasing

the proportion of cash will lead the organization towards a

stable financial position. There are indications that a strong

correlation exists between the cash ratio and financial

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performance, which suggests that having a higher cash ratio may

result in better financial outcomes.

In 2023, Dolorso conducted a study entitled "Financial

Management Practices of Micro Enterprises in Quezon City." The

study revealed that micro-enterprise owners considered their cash

management practices to be the least effective aspect of their

business operations. The lack of adequate training and seminars

leads to poor financial management skills of micro-enterprise

owners. As per the study, microenterprises struggle to manage

their cash flow since they do not maintain proper records or

deposit cash regularly. Neglecting the importance of financial

control, makes them unaware of potential losses, which directly

impact their business operations. In addition, the study found

that microenterprises typically rely on personal savings instead

of selling assets or obtaining loans, making them less efficient

in terms of funding their business. Therefore, microenterprises

need to implement strict cash management practices to ensure

sufficient cash flow, as this is the most critical asset for

keeping the business up and running.

Foreign Studies

The study conducted by Ahmad (2016), entitled “Cash

Management Practices in Micro and Small Businesses in Malaysia,"

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concluded that cash management practices are essential to

increasing profitability, sustainability, and future planning.

This study shows that micro and small businesses implement cash

management practices at a high level based on their 2.96 average

mean, but there are problems in cash management that occur when

the person who is assigned to the preparation of the accounting

record and cash budget does not focus on the internal control of

cash management practices. Some micro and small businesses do not

control and monitor their sales and income, which leads to

insufficient amounts of money to cover business expenses and cash

management failure. It is important that entrepreneurs be aware

of the benefits of cash management, such as improving

performance, strengthening business efficiency, and enhancing

long-term survival, to develop the best ways to have effective

cash management practices.

The study conducted by Kakeeto et al. (2017), entitled “Cash

Management and Organizational Profitability in Gumutindo Coffee

Cooperative Enterprise Limited," concluded that cash management

is effective because it positively affects the profitability of

the Gumutindo Coffee Cooperative Enterprise (GCCE) by 16.4

percent. Implementing cash management is helpful to have

sufficient cash available to manage day-to-day operations and to

reduce cashrelated costs to achieve business growth. According to

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the findings of their study, they revealed that the GCCE has

weaknesses in its cash management that need to be improved to

make it more effective.

Cash is the lifeblood of any business. That's why their study

recommended that the finance manager and its management team

implement a cash policy to have guidance, financial discipline,

and effective cash management to prevent cash shortages, minimize

short-term borrowing, and improve the profitability of the

business.

Theoretical Framework

This study is anchored on two theories: Miller-Orr and the

Cash Conversion Cycle (CCC) theory. First, a financial model

called the Miller-Orr theory, developed by Merton and John in

1960, aims to determine the target cash balance for a business,

while the CCC theory, developed by Richards and Laughlin in 1980,

which aims to optimize the cycle of converting its investments in

inventory and other resources into cash flows from sales that

helps with the efficient use of cash resources.

According to Richards and Laughlin (1980), CCC is a dynamic

indicator in liquidity analysis. Liquidity analysis is a

financial evaluation technique that uses several ratios to

determine the capacity of the organization to pay its financial

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obligations at the right time. The cash conversion cycle measures

the length of time between a firm's cash payment for the purchase

of inventory and the end of a firm’s operating cycle: the receipt

of cash for the sale of goods. The CCC measures the time it takes

to convert its investment in inventory into cash flow from a

sale. The shorter cash conversion cycle enhances the financial

sustainability and potential growth of the business.

In addition, CCC is a crucial financial metric that

indicates the efficiency of how the business manages its working

capital. According to Charitou et al. (2010), efficient

utilization of the firm’s resources through working capital

management entails managers finding effective and efficient ways

to deal with the cash available for day-to-day operations. This

would enable the achievement of optimum investment, which

translates to increased cash inflows and a lesser need for

external financing. According to Jose et al. (1996) and Eljelly

(2004), an organization would be more profitable if it achieved a

shorter CCC. Additionally, CCC is measured by adding the average

receivables collection period plus inventory turnover in days

minus the average payment period.

The concept of Miller-Orr theory is essential for businesses

to determine the optimal level of target cash they need to hold.

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According to Miller and Orr, business can set the lower and upper

limit which represent the thresholds beyond which the firm should

take action to either invest excess cash or obtain additional

cash to return to the target cash balance. The target cash

balance represents the ideal level of cash that minimizes the

total cost of managing cash under stochastic cash flows.

Furthermore, this theory helps businesses establish target cash

balances and determine when to initiate cash transfers or

investments based on deviations from these targets. By monitoring

cash balances relative to the upper and lower limits, businesses

can implement proactive cash management strategies to maintain

optimal liquidity levels while minimizing costs.

Overall, the Miller-Orr Model provides a valuable framework

for businesses to optimize their cash management strategies by

considering the trade-offs between holding excess cash and facing

cash shortages. It helps businesses strike a balance between

liquidity while minimizing with managing cash.

Conceptual Framework

The conceptual framework of our study illustrates the

expected relationship between the two variables that explain the

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effectiveness of cash management on profitability in the

manufacturing industry in San Jose City, Nueva Ecija.

Figure 1. Research Paradigm

To further discuss the conceptual framework of the study.

The diagram follows the IV-DV model, which will illustrate the

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relationship between the independent variables and dependent

variables. It gives a clearer understanding of how changes in

cash management, the independent variable, affect the dependent

variable, which is the profitability of the organization. By

using this model, the study can provide a detailed analysis of

the research problem and the factors that contribute to it.

Cash Management: Cash management is the independent

variable. Cash management is important to every individual, and

business management is the process of collecting and managing all

the cash flow of the business. It encompasses various strategies,

procedures, and tools that aid in optimizing cash inflows and

outflows while ensuring effective management of working capital.

Effective management of cash is essential for the long-term

existence of businesses. By maintaining adequate liquidity,

businesses can meet their financial obligations as they arise,

such as paying bills, salaries, and taxes. Moreover, proper cash

management provides businesses with the necessary funds to invest

in growth opportunities.

Profitability: Profitability is the dependent variable.

Profitability is a crucial factor that determines the long-term

viability of any business. It refers to the ability of a company

to generate profits over a sustained period of time, which is

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essential for its survival and growth. It is a justification for

the effective cash management and good performance of the

business.

Statement of the Problem

This study aims to determine the effectiveness of cash

management on improving the profitability of micro and small

enterprises (MSEs) in the manufacturing industry in San Jose

City, Nueva Ecija.

Specifically, it sought answers to the following questions:

1. How may the business profile of the respondents be described

in terms of:

1.1 Length of operation,

1.2 Type of manufacturing industry,

1.3 Number of employees, and

1.4 Average asset size?

2. What are the prevailing cash management practices of Micro

and Small Enterprises (MSEs) in the manufacturing industry

in San Jose City, Nueva Ecija in terms of:

2.1 Working capital management;

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 2.2 Cash conversion cycle; and

2.3 Target cash balance?

3. How profitable are MSEs in San Jose City, Nueva Ecija, in

terms of:

3.1 Return on Asset;

3.2 Return on Equity; and

3.3 Net profit margin?

3. Is there a significant difference between the cash

management practices of Micro and Small Enterprises (MSEs)

when they are grouped according to their business profile?

4. Is there a significant relationship between cash management

and the profitability of MSEs in San Jose City, Nueva Ecija?

Hypotheses of the Study

Based on the discussion of review of related literature, we

develop two hypotheses:

Ho1: There is no significant difference between the cash

management practices of Micro and Small Enterprises (MSEs) when

they are grouped according to their business profile.

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Ho2: There is a significant relationship between cash management

and the profitability of MSEs in San Jose City, Nueva Ecija.

Significance of the Study

This study explores the relationship between cash management

practices and profitability in medium and small enterprises

(MSEs) in San Jose City, Nueva Ecija. This study will help medium

and small enterprises handle cash, which might be very beneficial

in operating a business more efficiently and effectively in the

long run.

The findings of the study will be significant for the

following:

1. Manufacturing Industry. To help the manufacturing

industry maintain a suitable level of cash to keep its

manufacturing activities running smoothly. On the other hand,

this helps the long-term financial stability and profitability of

the manufacturing industry.

2. Business firms. To provide business owners with

effective cash management skills. This study will enlighten

business owners about the importance of tracking cash inflows

into their businesses and monitoring cash outflows such as bills,

salaries, and cash in order to increase the profitability and

success of their businesses.

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 3. Employees. To help the employees implement better cash

management procedures and policies in order to handle cash more

effectively for a profitable and stable organization.

4.Communities. To help them better understand the importance

of proper cash management as well as the benefits of wisely

managing cash in their day-to-day lives.

5.Students. To help them become more aware of the importance

of cash management and to make them realize and appreciate the

value of handling cash effectively and efficiently, that could be

of great help in shaping their future.

6.Future Researchers. This study can be the basis for future

research that would like to conduct a study related to this study

entitled “The Effectiveness of Cash Management on Profitability

in the Manufacturing Industry.”

Scope and Delimitation of the Study

This study primarily focuses on the effectiveness of cash

management on profitability. The study will be done in selected

micro and small enterprises around San Jose City, Nueva Ecija.

Furthermore, only MSEs in the manufacturing industry is included

in our study. The methodology comprises a questionnaire survey

with the restaurant manager and owner, which we will use as a

reference for the study.

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 The study was conducted for a period of (1) year from December

2023 to March 2024

Definition of Terms

To facilitate the understanding of this study, the following

terms are defined:

Cash Management. The process of managing, monitoring, and

maximizing the flow of cash in and out of the business.

Profitability. refers to the capacity of a business to

produce financial gain or profit, which is usually determined by

comparing the amount of money received with the amount of money

spent.

Micro and Small Enterprises (MSEs). The two criteria in

operationally defining MSE, namely employment and asset size. It

is classified as micro if it has less than 11 employees and small

if it has 11-99 employees. On the other hand, the Magna Carta for

Micro and Small Enterprises classifies an enterprise as micro if

it has up to Php 500,000 asset size and small if it has Php

500,001–

5,000,000. In this study, they are the selected MSEs in the

manufacturing industry in San Jose City, Nueva Ecija.

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 CHAPTER II

RESEARCH METHODOLOGY

This chapter presented the details of the research

methodology. It presented the research method, source of data,

instrumentation and collection, and tools for data analysis.

Research Design

This study employed a descriptive correlational research

design that will explain the relationship between the two

variables without making any claims or assumptions about the

cause or effect. According to McBurney & White (2009),

descriptive correlational design is used in research studies that

aim to provide static pictures of situations as well as establish

the relationship between different variables. In this approach,

researchers will gather and examine information on variables to

determine if there is a link between them. They give summaries

and other important data about study samples and measures to

researchers. This research design was chosen by the researchers

as it is suited to the nature of the study and the best fit for

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assessing the effectiveness of cash management on profitability

in the manufacturing industry in San Jose City, Nueva Ecija.

Figure 2: Gantt Chart of the study

The researchers used this chart for scheduling tasks and to

monitor the progress, it will help the researchers to assess how

long each task should take, to determine the resources needed,

and to plan the order of the tasks to complete the research. This

chart demonstrates all the tasks that should be completed for the

two semesters every month.

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 The research began with the orientation, knowing the nature

and purpose of accounting research, and preparation for the title

approval took place between the first and third weeks of December

and was submitted subsequently in the same month. Identifying

research objectives and problems, all parts of chapter one, and

the submission of chapter one to the research adviser and

revision took place between the first and second week of January.

In the third week of January, the researchers started all the

parts of chapter two, the submission of output in this chapter,

preparation for the mock defense, and the actual mock defense of

chapters one and two. The fourth week of January will be the

preparation of the researchers for their proposal defense in the

second week of February.

Next semester, the researchers had a major revision until

the end of the month of July. The researchers will officially

begin the conducting survey in the month of August. Afterward,

the data collected from the respondents were tabulated, followed

by the analysis and interpretation of the research findings,

along with the proposal to propose action plans based on the

results of the study in the first and second weeks of the month

of September. In the first week of October, the researchers made

a summary, conclusion, and recommendation based on the findings.

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In the following week, the researchers made alternations to the

typographical errors after proofreading the final manuscript

before submitting and finalizing the hard copy of the manuscript.

The preparation for the final defense will take place in the

third week of October. Finally, in the third week of October,

there will be a final defense of the research paper by the

researchers.

Research Locale

This study will be conducted in San Jose City. The city of

San Jose is one of the five cities and a third-class component

city in the province of Nueva Ecija. This city is a small town

located in the heart of the Philippines and considered as “Rice

Granary of the Philippines”. It is an Agro-Industrial Hub of

Central Luzon and it is developing a political, social, cultural,

and economic environment conducive to agro-industries, trade and

commerce, natural resources, and infrastructure. It is considered

as Agro-industrial because it manufactures agricultural products

for both food and non-food output. There are wholesale and retail

trading, automobile and furniture stores, banks, and food service

establishments that can be found in the heart of the city. This

study will be conducted in San Jose City because it aims to

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determine the potential green economy trends and opportunities of

inventory management.

Figure 1. Showing the satellite view of San Jose City, Nueva

Ecija. (Courtesy: Google Maps)

Respondents of the Study

The researchers selected the micro and small enterprises in

San Jose City, Nueva Ecija, to be part of this research study,

specifically the manufacturing industries: woodworking, food

processing, and construction materials. To accomplish the

research study, the researchers must analyze the data provided by

the respondents. The target sample of questionnaires is estimated

to be around 154, and the respondents will be the business owners

or managers of these MSEs. Furthermore, it classifies an

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enterprise as a micro if it has less than 11 employees and a

small if it has

11–99 employees. However, an enterprise is classified as micro if

it has up to Php 500,000 in asset size, and a small enterprise if

it has Php 501,000–5,000,000 in asset size.

Sample and Sampling Procedure

The type of non-probability sampling technique that the

researchers will use is total population sampling, a type of

purposive sampling technique that involves examining the entire

population (i.e., the total population) that have a particular

set of characteristics (e.g., specific attributes/traits,

experience, knowledge, skills, exposure to an event, etc.).

According to Babbie E.R (2016), Total population sampling, also

known as census sampling, involves studying the entire population

rather than selecting a sample from it. This method ensures that

every individual or element within the population is included in

the study. Total population sampling is typically used when the

population size is small or when it is feasible to study the

entire population due to its manageable size.

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Research Instrument

In conducting a study on the effectiveness of cash

management on the profitability in the manufacturing industry in

San Jose City, Nueva Ecija, the researcher used a descriptive

correlational research design to gather important data.

The Questionnaire. In this study, the researcher will use a

printed survey and Google form questionnaire to collect the

information needed in the effectiveness of cash management on the

profitability in the manufacturing industry in San Jose City,

Nueva Ecija.

1.1 Description. The research questionnaire consists of three

parts. The questionnaire will be a checklist designed to

collect data regarding of the cash management practices

employed in the company that have an impact on

profitability. Part 1 of the research questionnaire focuses

on the business profile, which aims to collect information

about the business nature. Part 2 will be the cash

management practices. Lastly, part 3 is the effect of cash

management on the profitability of the business.

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Data Gathering Procedure

This study used different courses of action to gather

adequate information necessary for the completion and

accomplishment of the study. The researchers considered the

following:

Request letter. First, the researchers will create a request

letter, which will be signed by our research adviser and the Dean

of the College of Management and Accountancy. Which is

subsequently forwarded to the Municipal Licensing Office in San

Jose City to request a list of micro and small enterprises in the

Manufacturing Industry.

Questionnaire. The researchers will construct a

questionnaire to be presented, reviewed, and approved by the

research adviser together with the Dean of the College of

Management and Accountancy.

Consent and selection of respondents. The researchers have

a consent letter sent online via Facebook or Messenger or a

printed form to seek the consent of our respondents.

Distribution and collection of questionnaires. The

researchers will give the questionnaire to the respondents

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according to their availability and assist them as they answer

the questions.

Tabulation, Interpretation, and analysis of data. The

researcher will now tabulate, interpret, and analyze the data

after gathering the information from the interviews and the

questionnaires we issued.

Statistical Treatment of Data

After gathering all the completed questionnaires and

faceto-face interviews, the researchers collected, tailed,

analyzed the data, and correspondingly summarized it. The

researchers used statistical tools such as frequency,

percentage, and weighted mean to facilitate the analysis and

interpretation of the data.

1. Percentage and Frequency. The Business Profile were

calculated with the help of this tool. It was used to

determine the percentage of survey takers that provided a

specific response to each of the survey questions stated.

The following formula would be:

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 P = 100%
N

Where:

P = Percentage f = Number of responses N =

Total Number of Respondents

2. Weighted mean. The Cash Management Practices and the

profitability of business were calculated with the help of

this tool.

The following formula would be:

WM=∑FW∕∑W

Where:

WM = weighted mean

Σ = summation symbol F =

frequency for each option w

= assigned weight

3. Likert Scale. The following Likert Scale serves as the

guide for interpreting the data gathered.
Scale Weighted Means/Equivalent Corresponding Remarks
5 4.20 – 5.00 Strongly agree

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 4 3.40 – 4.19 Agree
3 2.60 – 3.39 Neutral
2 1.80 – 2.59 Disagree
1 1. – 1.79 Strongly Disagree

5. T-test

This tool will be used to identify if there is a significant

difference between the cash management practices of MSEs in the

manufacturing industry in San Jose City, Nueva Ecija when they

are grouped according to their business profile.

Where:

x̄1 = Observed Mean of 1st Sample x̄2

= Observed Mean of 2nd Sample s1 =

Standard Deviation of 1st Sample s2=

Standard Deviation of 2nd Sample n1 =

Size of 1st Sample n2 = Size of 2nd

Sample

6.Pearson Correlation Coefficient (r)

Pearson correlation is a statistical analysis commonly used

in research to assess the strength and direction of a linear

relationship between two continuous variables.

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 The Pearson Correlation Coefficient will be used to identify if

there is a significant relationship between cash management and

and the profitability of MSEs in the manufacturing industry in

San Jose city, Nueva Ecija The Pearson correlation coefficient

(r) is calculated using the formula

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3.1 The business was profitable for the
past 3 months.
3.2 We make efficient use of our
resources.
3.3 The business’s monthly sales are
increasing.
3.4 Proper planning of tax helps to reduce
tax.
3.5 The business expenses are decreasing
every month.
3.6 The business is experiencing
improvement in sales revenue

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