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RESEARCH PAPER No.

___2018 – 19

THE RELATIONSHIP OF FINANCIAL LITERACY


OF PROPRIETORS TO THE GROWTH OF MICRO
RESTAURANTS IN BAGUIO CITY

Pamela D. Cariño, Kara O. Dango, Yvonne Daphne C. Puday, Vina C. Vicente, and
Erlinda G. Bialno, CPA

ACCOUNTING RESEARCH

We envision Saint Louis University as an


excellent, missionary, and transformative
educational institution zealous in the
formation of human resources who are
imbued with the Christian spirit and who are
competent, creative, and socially involved.

SCHOOL OF ACCOUNTANCY, MANAGEMENT,


COMPUTING, AND INFORMATION STUDIES
SAINT LOUIS UNIVERSITY
PHILIPPINES

November 21, 2018


Saint Louis University
School of Accountancy and Business Management
Department of Accountancy

APPROVAL SHEET

This thesis entitled “THE RELATIONSHIP OF FINANCIAL LITERACY OF


PROPRIETORS TO THE GROWTH OF MICRO RESTAURANTS IN BAGUIO
CITY” has been prepared and submitted by Pamela D. Cariño, Kara O. Dango, Yvonne
Daphne C. Puday, Vina C. Vicente, in partial fulfillment of the requirements for the
degree Bachelor of Science in Accountancy and Management Accounting has been
examined and is recommended for acceptance and approval for oral examination.

Erlinda G. Bialno, CPA


Adviser

PANEL OF EXAMINERS

Approved by the Committee on Oral Examination on November 28, 2013 with a grade of
____________.

Bernadette Adelaida M. Cope,CPA,MBA


Chairperson

Erna A. Dupo, CPA, MBA Erlinda G. Bialno, CPA


Member Member

ACCEPTED AND APPROVED in partial fulfillment of the requirements for the degree
Bachelor of Science in Accountancy and Management Accounting.

ALLAN FRANK B. SILVA, CPA, MSBA REYNALDO S. BAUTISTA, DM


Head, Department of Accountancy Dean

1
THE RELATIONSHIP OF FINANCIAL LITERACY OF
PROPRIETORS TO THE GROWTH OF MICRO RESTAURANTS IN
BAGUIO CITY

Pamela D. Cariῆo
Tabuk City, Kalinga
09171562888
divinaellacarino@gmail.com

Kara O. Dango
Lagawe, Ifugao
09959952331
karaodango@gmail.com

Yvonne Daphne C. Puday


Tabuk City, Kalinga
09972376992
yvonnedaphnepuday@gmail.com

Vina C. Vicente
Aguinaldo, Ifugao
09555416633
vinavcente68@gmail.com

Keywords:
Financial Literacy, proprietors, micro restaurant growth

ABSTRACT: This study is about the relationship of financial literacy of proprietors to the growth
of micro restaurants in Baguio City. The researchers prepared questionnaires in order to gather
relevant information about the considered relationship of financial literacy of proprietors to the
growth of micro restaurants in Baguio City. The sample size of the research was obtained using
Yamane’s formula. This study is limited only to micro restaurant owners in Baguio City. This
research used Likert scale, correlation, and anova as methods in interpreting the data gathered.
Based on the findings, it was determined that there is a significant relationship between the
financial literacy of proprietors and the business growth as according to gender with female
having growth of 43% and male with a growth of 49%, as according to educational attainment
with high school graduate having value of 43%, college graduate with 48%, and post-college
graduate with 38%, as according to age with ages 18-32 having 53% growth, 33-46 with 37 %
growth, 47-60 with 47% growth and 60 and above with 52% growth, as according to years in
operation, businesses operating in 2-3 years with 50% growth, 4-5 year with 38% growth, 6-7
years with 36% growth, 8-9 years with 32% growth and 10-11 years with 63% growth. The
overall result showed that the proprietors have moderate financial literacy with a total mean
score of 3.37. The researchers suggest that further research can be done testing the impact of
other variables that are not covered in this study to ensure more reliability and accuracy of the
data as well as the results.
Contents
CHAPTER ONE: INTRODUCTION ................................................................................ 4
1.1 INTRODUCTION........................................................................................................ 4

1.2 SIGNIFICANCE OF THE STUDY ............................................................................. 5

1.3 STATEMENT OF THE PROBLEM ........................................................................... 6

1.5 HYPOTHESIS ............................................................................................................. 7

1.6 REVIEW OF RELATED LITERATURE ................................................................... 7

CHAPTER TWO: METHODOLOGY ............................................................................ 16


2.1 RESEARCH DESIGN ............................................................................................... 16

2.2 DATA GATHERING INSTRUMENT ...................................................................... 16

2.3 POPULATION AND SAMPLE .............................................................................. 168

2.3 DATA GATHERING PROCEDURE........................................................................ 16

CHAPTER THREE: RESULTS AND DISCUSSION ................................................... 20


3.1 PRESENTATION, ANALYSIS AND INTERPRETATION .................................... 20

PROBLEM 1 ........................................................................................................ 20

PROBLEM 2 ........................................................................................................ 20

PROBLEM 3 ........................................................................................................ 20

PROBLEM 4 ........................................................................................................ 20

CHAPTER FOUR: CONCLUSION AND RECOMMENDATION ............................. 31


4.1 CONCLUSION .......................................................................................................... 31

4.2 RECOMMENDATION ........................................................................................... 316

APPENDIX .......................................................................................................................... 32
REFERENCES .................................................................................................................... 41

3
CHAPTER ONE: INTRODUCTION
financial world today is much more complex
1.1 INTRODUCTION than it was before. Thus, it is a must to gain
Most entrepreneurs enter this industry with more comprehensive knowledge on a range
enough capital to open the restaurant doors of products and services offered by financial
but not enough to sustain the initial or latter institutions including the impact of interests
few months of a restaurant’s life span. With and the consequences of mismanaging credit
the abundance of reasons for the either the accounts. .
failure or growth of the business, importance
is focused more on the economic perspective. Restaurants are good businesses in the
The focus of this research is to examine the Philippines because Filipinos love to eat and
relationship of financial literacy with the these restaurants cater to their needs for
growth of micro restaurants in Baguio City. convenience, quick preparation, and
Studies on financial literacy have grown in ready-to-eat meal options. Based on the
importance in the recent years. Based on the latest data from the Philippine Economic
search results using EBSCOhost Online Zone Authority (PEZA), as of the end of the
Research Databases, more than 2,600 year 2017, six percent of business
Academic Journals were published with establishments in Baguio City are in food
financial literacy as keywords from January business like restaurants, cafes, cafeteria, ice
2009 until December 2014. This goes to cream shops, refreshments, eatery, canteen,
show that many academic researchers saw fast food, and coffee shops. However,
the importance of financial literacy to the restaurants are sometimes risky to run, due
security of the financial sector .(Guliman, to the many sunk costs of setup, the low
2015). margin of food preparation, high cost of
personnel, and risk of spoilage. This is
According to Remund (2010), the exactly the reason why sole proprietors who
operational definition of financial literacy is manage these small businesses should have
“having the knowledge, skills and financial literacy.
confidence to make responsible financial
decisions” (p. 278). This means that Eniola, and Entebang (2016), their study
financial knowledge alone is not enough to showed the influence of financial literacy on
become financially literate, but one needs to the performance of small and medium
have financial skills and confidence which enterprises (SMEs) in Nigeria as to how it
could translate to responsible decision contributes to employment creation and
making. Sulaiman adds that today’s social progress. According to Telstra (2007)
financial markets and businesses have in SME Trends and Achievements Report,
become progressively complex. It is the role of SMEs has increased substantially
important to identify ways to enable in real terms over the last decade in
organizations, especially small businesses producing international competitive
that have a significant impact on the advantage. Governments all around the
economy, to access the financial knowledge world increasingly recognise the growing
and capabilities that are needed to make role of SMEs as an important engine for net
good management decisions. As earlier job creation innovation, and productivity
contended by Greenspan (2005), the (Organisation for Economic Cooperation
and Development 2010). The Asian survive weaknesses in all those areas and
Development Bank suggests that on average still remain in business. We've all seen those
during 2007–2012 in Asia, SMEs accounted places. What a restaurant cannot survive is
for ninety-eight per cent of the business failure of financial management, including
population (Asian Development focusing on revenue, profit, expenses, debt,
Bank-Organisation for Economic and appropriate staffing levels.”
Cooperation and Development 2014).
Financial literacy is indeed essential as
argued by Klapper, Lusardi and Panos
1.2 SIGNIFICANCE OF THE STUDY (2013). Their study revealed that individuals
“What a restaurant cannot survive is failure with higher financial literacy are
of financial management…” (Susskind and significantly less likely to experience an
Spies, 2011) adverse income shock and have greater
Whenever a movement in the success or unspent income leading to higher spending
failure of the restaurant is triggered, initial capacity. Taft, Hosein, Mehrizi and Roshan
responses draw in to the quality of food, the (2013) also claimed that “Higher financial
location of the business, the high fixed costs, literacy leads to greater financial well-being
or even in the marketing perspective. But and less financial concerns. Finally, financial
what we sometimes fail to give importance wellbeing leads to less financial concern” (p.
to is on the economic perspective. This 63) Studies generally argue that financial
category includes economic reasons such as knowledge and capabilities can increase the
decreased profits from diminished revenues; ability of individuals to make informed and
depressed profits resulting from poor effective decisions (Lusardi 2012)
controls; and voluntary and involuntary
bankruptcies, involving foreclosures, The SMEs inability, many times to live
takeover by creditors, receiverships, or beyond their first few months of existence
frozen assets for nonpayment of receipts. has been attributed partly to lack of finance
(Parsa, et al 2005) (Amoako, 2013). Also Sege (2010) said
small businesses fail because those who start
Running a restaurant is risky and there are them have poor accounting record keeping
many factors at play. Some start-up and does not bother to get money sorted out
restaurants do not even last for six months. before they start the business among others.
Susskind and Spies iterated in their study the The absence of basic accounting practices in
underserving lack of attention given to the most SMEs in the Philippines tends to
financial side of the restaurants for the compound their financial challenges. Most
success of the business. “We all know that SMEs can’t access funds because banks and
the most important thing about a other financiers cannot readily verify their
restaurant—the thing that stands out and vibrancy and their access to quality projects
shapes a guest's experience—is the food. (Srinivas, 2005).
Not only that, but we can name other
elements that are crucial to the guest's In a study of 148 respondents in Nigeria
restaurant experience, including staff, (Enugu), Okoli (2011) links proper record
service, location, ambience and decor, menu, keeping and profitability of small scale
and overall execution. But restaurants can enterprises and assert that due to inadequate

5
record keeping, the small scale operators this we will also determine the demographic
could not assess their performances profiles of these proprietors. Insights on the
effectively. He argues that in order to result of the determination of the
enhance the profitability of small scale relationship between financial literacy and
enterprises and their continuity, there is need business growth will help the small business
for adequate record keeping which will help owners in adjusting whether to improve their
the proprietors to keep track of the financial literacy and discover some
performance of these enterprises. financial concepts that they did not know of
that would help them generate valuable
Given there is a higher failure rate in the decisions to contribute to the growth of their
first years of a business start-up (Wang business.
2008), financial literacy may be a key factor
in ensuring ongoing sustainability of the
firm. If a firm does not have the essential 1.3 STATEMENT OF THE PROBLEM
financial resources, the probability of failure
in the earlier stages of operation may be The main objective of our study is to
greater. Improving financial literacy, thus its determine the relationship between financial
capability, is thought not only to enable the literacy and business growth of micro
business to make efficient decisions, but also restaurants in Baguio City. It specifically
to contribute positively to businesses’ aims to know:
performance. 1. The demographic profile of the
proprietors of micro restaurants in
Financial literacy can be an essential Baguio City in terms of:
strategic resource for the efficient allocation o Gender
of finance and for greater financial stability. o Educational Attainment
Businesses with a good understanding of o Age
financial literacy would be expected to be o Years in Operation
better placed than firms without those skills. 2. The level of financial literacy of
Lack of financial knowledge and capabilities sole proprietors in terms of:
can also result in circumstances that make o Budgeting
firms vulnerable to severe financial crises o Borrowing
(Mason & Wilson 2000), leading to a lower o Investing
rate of longer-term performance and higher o Record Keeping
risk of cyclical volatility in the firm. Indeed, 3. The level of growth of Micro
financial knowledge and capabilities can Restaurants in terms of:
help the firms to cover unpredictable o Annual Percentage increase
eventualities and provide financial security. in profit
o Annual business profit
This study will determine the level of 4. The significant relationship between
literacy of proprietors and how they used the financial literacy of proprietors
this in operating their restaurants. This also and the growth of their business?
determines whether the financial knowledge
of small business owners contribute to the
growth of their food restaurants. In addition,
1.4 CONCEPTUAL FRAMEWORK to facilitate economic and financial
sustainability, individuals need the cognitive
ability to understand financial information.
INTERVENING VARIABLE This appears to be an argument for the value
Demographic Factors: of financial literacy as it pertains to business
 Age of Business Owners growth and provides the premise for the
study to hypothesize that:
 Gender
 Educational Attainment
Hypothesis 1 (Ho): There is no significant
 Years in Operation
relationship between the financial literacy of
the owners of micro-restaurant and business
growth.
Hypothesis 2 (Ha): There is a significant
INDEPENDENT VARIABLE relationship between the financial literacy of
Financial literacy in terms of: the owners of micro-restaurant and business
 Budgeting growth.
 Borrowing
 Investing 1.6 REVIEW OF RELATED
LITERATURE
 Record Keeping
Lee and Hsieh (2010, p.110) who believed
“that entrepreneurship is the cause for
discovering, driving new combinations of
production factors and create social
DEPENDENT VARIABLE economy”. However, Troilo (2011, p.159)
Growth viewed entrepreneurship as “a set of
activities that involve the discovery,
 Annual Percentage Increase in
evaluation, and exploitation of opportunities
profit
to introduce new goods and services, ways
of organizing markets, processes, and raw
materials through organizing efforts that
previously has not existed
EXPECTED OUTPUT
 To determine the significant This research sought to focus on
relationship between the entrepreneurs as individuals, being owners
financial literacy of of micro-restaurants in Baguio City. The
proprietors and the growth of owners of a restaurant will certainly want to
their business. monitor their business’s financial condition.
Margins in the restaurant business are
extremely tight, so keeping a watchful eye
1.5 Hypothesis on your finances is critical. Hence, failure to
Gouws and Shuttleworth (2009:141) stated effectively and efficiently manage
that individuals’ decisions and subsequent restaurants due to inadequate financial
actions flow from their understanding of the literacy of key people would not only harm
surroundings in which they operate. In order the individual businesses but could also

7
negatively transcend to the aggregate However, Remund
economy. However, many new business (2010) believed that saving as a financial
owners are daunted by the mere idea of literacy concept will be more applicable to
bookkeeping and accounting. But in reality, the general public and less to entrepreneurs
both are pretty simple. Keep in mind that in the SMEs sector. Instead of saving money,
bookkeeping and accounting share two basic SMEs would rather invest it in their
goals: to keep track of income and expenses, enterprise growth strategies.
which improves chances of making a profit, Financial literacy topics such as record
and to collect the financial information keeping, budgeting, personal finance and
necessary for filing various tax returns. savings were viewed to be more important to
(Williams, Haka, Bettner, and Carcello, lower-income individuals (Rhine and
2008). Comeau, 2000).
In this study, the researchers opted for four
The term ‘financial literacy’ combines the constructs to be adapted for this research,
two words which separately mean a myriad namely, (1) Budgeting, (2) Borrowing, (3)
of issues but which can misplace their Investing, and (4) Record Keeping.
relevance when used together. Literacy is
defined in the Oxford Dictionary of English According to Atkinson and Messy (2012),
(Stevenson 2010) as ‘the ability to read and financial literacy is a combination of
write’. Collins Dictionary and Thesaurus awareness, knowledge, skill, attitude and
defines literacy as one’s ‘ability to use behavior necessary to make sound financial
language effectively’ (HarperCollins 2005). decisions and ultimately achieve individual
There is no universally accepted definition financial wellbeing. For Lusimbo (2016),
of financial literacy (Organisation for financial literacy is simply the ability of an
Economic Cooperation and Development individual to use knowledge and skills to
2005). As conceptualised in the literature, manage financial resources effectively.
financial literacy means different things in Lusimbo further stated that a financially
different contexts. The term financial literate MSE manager is likely to interact
literacy varies according to one’s skills, with confidence with financial service
needs and experiences (Worthington 2006). providers and make fewer management
mistakes than their illiterate counterparts
Remund (2010) summarized the four most which ultimately results to MSE growth.
commonly used definitions of financial
literacy as budgeting, saving, borrowing, Njoroge (2012), in his study of the
and investing. The author concluded by relationship between financial literacy and
edging the researchers to use these concepts entrepreneurial success in Nairobi county
as effective instruments for measuring Kenya, he found out that financial literacy
financial literacy of individuals. Financial exposes entrepreneurs to better
literacy helps in empowering and educating decision-making skills that lead to
investors so that they are knowledgeable borrowings, risk taking, diversifications, and
about finance in a way that is relevant to investments. He concluded that SMEs that
their business and enables them to use this are more successful are run by entrepreneurs
knowledge to evaluate products and make who are financial literate and understand key
informed decisions (Remund, 2010). financial concepts that include, risk
management, interest rates, time value for determinants of financial literacy, various
money and financial market authors have written explanations proving
the effectiveness of the four measures of
One of the barriers to developing a financial literacy listed above- budgeting,
standardized approach to financial literacy is borrowing, investing, and record keeping.
the use of other terms by researchers. It is Majority of the questions have been
unclear whether the terms are used as patterned from the study of Musie (2015)
different concepts or synonyms. Many terms and Sucuahi (2013)
used to describe financial literacy include
financial knowledge (Howlett et al. 2008), BUDGETING
financial capability (Holzmann 2010; Taylor Rickards (2008) highlighted that SMEs
& Wagland 2011) and financial education reviewed their strategic objectives at least
(Norman 2010). These terms have been once a year. This is of vital importance for
variably refined from a general definition end of the year financial reporting as key
including an understanding of basic financial institutions such as the South African
concepts to a specific definition such as an Revenue Services (SARS) also based their
ability to manage personal finances. tax year on a 12 months period. This study
established that most SMEs undertook their
Financial knowledge has been used as the budgets based on a 12 months cycle.
iteration of the financial literacy in previous Furthermore, this study ascertained that
studies; for example, Kim (2001), Servon SMEs also prepared their budgets at the
and Kaestner (2008) and Courchane and beginning of each financial year and held
Zorn (2005). Although they are human review sessions at least once a year.
capital, the latter consists of both knowledge
and ability. The former is an integral Entrepreneurs used budgets as part of
dimension of, but not equivalent to, financial performance management for their
literacy (Hung et al. 2009; Huston 2010). employees. Pietrzak (2014) also argued in
Whereas, financial literacy has an additional favour of budgets being used as part of
application dimension in which individuals organisation’s evaluation, motivation and
should have the ability and confidence to use performance management. However, Cohen
their financial knowledge to make informed & Karatzimas (2011) argued that there was a
decisions (Huston 2010). To the extent that limited use of budgets as part of performance
financial literacy involves application, rather evaluation as the human resource
than just knowledge, this skill likely depends departments had limited involvement during
on a person's ability to apply the knowledge budgeting processes.
appropriately. Indeed, these two terms are
conceptually different. Therefore, using Warue et al. (2013) who wrote that budgets
financial knowledge and financial literacy reflected what management expected
interchangeably may indicate potential regarding firm’s performance. Budgets
problems. reflect how the enterprise is doing relative to
its objectives and overall strategy. The
THE USE OF FINANCIAL LITERACY literature revealed that budgets were aligned
CONCEPTS with the objectives and the overall strategy of
To further our review on the definition and the enterprises.

9
Østergren and Stensaker (2011) and Zeller reversal (Worthington, 2004). Micro
and Metzger (2013) highlighted that most entrepreneurs are highly literate in paying
organizations were making use of budgeting their loan balance on time. They are aware
processes such as beyond budgeting, better about the consequence in not paying the loan.
budgeting, rolling forecasts, and They knew that not paying on time will
activity-based budgeting, as a replacement of result in paying penalties and other
the traditional budgeting in order to navigate surcharges.
through the complex business environment
However, micro entrepreneurs are not much
The following questions are then literate in separating the payment of their
formulated: business loans from personal loan using
1. Mindfulness of restaurant owners/s their business money. Accounting principles
to develop business objectives to be assert that business transaction should be
achieved in a year separated from the owner’s transaction and
2. Knowledge and mindfulness of the this principle is fundamental and it applies to
business in preparing the budget all types of organization.
beginning of the financial year and
review at year end It was also noted that majority of the
3. Ability to budget from a basis for business owners prefer to borrow short-term
the employee performance contracts loan from Indian national lender than to
4. Ability to form a strong alignment borrow from financial institution such as
of the budget to the company banks, lending companies and credit card
strategy companies. This finding supports the
5. Knowledge in making use of observation of Leiber (2010) that only 20
budgeting process such as percent of the short-term credit for the small
activity-based budgeting, beyond businesses comes from the bank. In relation
budgeting, rolling budget instead of with this, the result also shows that business
traditional budgeting owners are not much concern on interest rate.
They are more concern about the approval of
BORROWING as a source of capital the loan.
Borrowed or debt capital is the capital
arranged from outside sources. Hyz (2011, p. 163) wrote that “the main
These sources of debt financing include the sources of external capital for small and
following: financial institutions, commercial medium-sized enterprises are the so-called
banks or the general public in case of non-banking sources of financing (trade
debentures (eFinanceManagement.com). credit, lease, factoring, franchising, loans
This is the ability to obtain capital from from the non-banking sector) and bank loans
outside sources with minimal cost and (short and long-term)”. Hyz (2011) argued
payoff obligation. Interestingly, Assibey that finance sourcing was based on the
(2010) found out that most micro firm’s development stage. The author further
entrepreneurs are illiterate with respect to argued that during the early growth stages
business financing. Without knowing that most enterprises rely on capital provided by
their obligation is getting bigger because of their owners or families members. It is only
interest and high debts will lead to business during the further phases of development
where the enterprise can source finances make use of financial ratios when making
from its retained earnings. Only medium investment decision. However, due to
sized firms may have easier access to bank complexity of some these financial
loans compared to smaller firms in the SME evaluations, Hoe (2010) suggested that
sector (Hyz, 2011). MSMEs ought to employ the services of a
professional such as a financial manager
With the consideration of the above studies, who will be able to assist the entrepreneurs
we formulated the following questions: with such financial matters in order to create
1. Mindfulness in separating the more value for the firm. Thus, knowledge
payment of their business loans and making use of financial ratios when
from personal loan using their making investment decisions increased
business money. considerably with high financial literacy.
2. Ability to split long term and short
debt in order to manage its balance Human capital development is another
sheets critical area. Studies have found a positive
3. Consideration of cost of borrowing relationship between business’ capital
i.e. interest rate before taking on a development and the business’ performance.
loan Chuluunbaatar et al (2011) further wrote that
4. Restaurant is fully conversant with appropriate investment and human capital
the process to acquire funding from usage in the company had a positive impact
different financial institution. on performance, productivity, and
profitability of the firms.
INVESTING
Although access to capital was still a major The following questions are then
challenge facing small businesses, formulated:
investment practices remained critically 1. Knowledge of restaurant in
important to SMEs. Prakash and Patawari investing its surplus cash in order to
(2014) argued that SMEs investment in generate more income in the future
fixed assets was vital in that it reduces 2. Familiarity with financial measures
investors’ risk, lead to reduction in operating such as NPV, IRR, ROA before
expenses and promoted sustainable jobs in committing to an investment
the long run. The investment in the stock 3. Ability to use third party to conduct
markets is also influenced by financial investment for the business.
literacy level of the entrepreneurs 4. Awareness of the criticality of
themselves. Van Rooij, Lusardi and Alessie e-commerce infrastructure and
(2011) established that the individuals with ability to invest in such e.g. internet
lower financial literacy level were unlikely website
to invest in stock. This finding was 5. Awareness of the importance of
confirmed by Guiso and Viviano (2014) also human capital and ability to invests
establishing that households’ participation in in human capital development e.g.
the stock market increased considerably with training of staff
high levels of financial literacy.
RECORD KEEPING
The literature confirmed that SMEs did Record keeping is a fundamental skill a

11
business person must possess. It is the were microenterprises, 9.50% (86,955) were
source of important information vital to small enterprises, and 0.44% (4,018) were
critical decision-making, and responsible for medium enterprises. Large enterprises made
minimizing risks (Gray, Sebstad, Cohen and up the remaining 0.43% (3,958).
Stack, 2009). This measure of financial
literacy suggests the effective record
systems considered to be critical in business
operation since business owners cannot rely
on their memory to summarize all
transactions of the day.

1. Knowledge in recording revenues


and expenditures, as well as cash
and expenses
2. Familiarity in using formal record
books such as journals and ledger
3. Consideration of preparing income
statements as basis in determining
the performance of venture
The Magna Carta for MSMEs defines
CATEGOR SIZE NO. OF
MSMEs as follows: Micro: Up to Php
Y EMPLOYEES
3,000,000 Small: Php 3,000,001 –
Micro ₱3 9 employees or
15,000,000 Medium: Php 15,000,0001 –
million less
and 100,000,000
below
Small ₱3-15 10-99
million employees GROWTH: For this study, we have
Medium ₱15-100 100-199 associated growth with increase in profit.
million employees The rate of revenue increase is among the
Large ₱100 200 employees most frequently used definitions of growth
million and up in the research literature (Davidsson,
and
above Steffens, & Fitzsimmons, 2009; Shepherd &
Wiklund, 2009).
First, we consider the relationship between
growth and profit. a series of empirical
The 2016 List of Establishments of the studies conducted by Alex Coad and his
Philippine Statistics Authority (PSA) colleagues (Coad, 2007, Coad, 2010, Coad
recorded a total of 915,726 business et al., 2011) reported a positive effect of
enterprises operating in the Philippines. This growth on profits, Goddard et al. (2004)
was 1.64% more than the 900,914 business showed a positive effect of profits on growth,
establishments reported in 2015. Micro, and Cowling (2004) found both positive
small and medium enterprises (MSMEs) effects to be significant. Most studies used
account for 99.57% (911,768) of the total firm-level panel data from advanced
establishments, of which 89.63% (820,795) European countries and confirmed the
positive relationship between growth and they have created (Ahmad, Halim & Zainal,
profits. 2010).

While large firms can choose growth Also, Lusardi (2012) found out that age and
strategies irrespective of their financial gender caused a difference in the level of
status, small firms may have to use their financial literacy. . Luksander, Béres,
retained earnings to finance growth. This Huzdik, and Németh (2014) also revealed
may lead to the argument that the positive that in both theoretical and practical
relationship between profit and growth may financial knowledge, “males, older people,
be stronger in the case of small firms. Indeed, those who pursue economic studies or who
some studies that investigate small firms are attending these kinds of courses at
(e.g., Cowling, 2004; Steffens et al., 2009) university know more about financial
report a positive effect of profit on growth. matters” (p. 220). Nonetheless, Fonseca,
Many previous studies, whose samples Mullen, Zamarro, Zissimopoulos (2012)
include both small and large firms, report a tried to explain the gender gap in financial
positive relationship. literacy. These authors reasoned that women
tend to be less financially literate than men
Strielkowski (2012) suggested that only the because “men specialize in making
objective indicators of business success household financial decisions thereby
should be adopted over the subjective acquiring financial knowledge and women
measures when measuring business success. specialize in other household functions”
The business success must be equated to the (p.105). These authors further argued that
achievement of positive economic growth their results showed that the gender gap is
indicators such as: profitability and growth eliminated once women and men have
in number of employees (Strielkowski 2012). similar education and are carrying the same
In line with Strielkowski’s (2012) view of number of responsibilities. These authors
business success, this research study made were trying to argue that gender alone is not
use of objective measurement of business a direct variable affecting financial literacy
success as represented by growth in terms of but can be mediated or moderated by the
both annual turnover and number of variables pertaining to level of education
employees. and the roles they take in the financial
decision making. A recent study by Moon,
DEMOGRAPHIC PROFILE: In the study Ohk and Choi (2014) support the findings of
conducted by Mugure (2017) regarding the Lusardi (2012) that there exist distinct
Factors influencing the growth of gender differences whereby men are more
Hoe (2010) wrote that majority of the SMEs financial literate than women. Moon et al.
were owner managed and most of the (2014) reasoned that Chinese female
owners did not have formal qualifications to students have fewer opportunities for
manage their businesses. The manner in financial education and financial
which they managed their business finances transactions making them less financial
was therefore, dependent on their education, literate than men.
practical experience and any prior training.
This is a cause for concern as the Financial literacy was found to decrease
entrepreneurs held key positions in the firms with age. (Lusardi, 2010) it was also

13
mentioned that older adults tend to have firm.
lower financial literacy and that younger In the study of Akben-Selcuk and
adults tend to have higher level of financial Altiok-Yilmaz (2014), their results showed
literacy. Lusardi (2012) contended that older that formal finance education in college was
adults (50 years old and above) and that significantly associated with higher financial
women, relative to men, tend to be less literacy scores. Literatures suggest that
financially literate as most of them would lower level of financial literacy is associated
answer “don’t know” when asked about with lower level of education (Almenberg
inflation, risk diversification and interest and Säve-Söderbergh , 2011;
rates. Researches (Lusardi & Mitchell, 2011, Bucher-Koenen and Lusardi , 2011; Lusardi
Rooji et al., 2011; Fernero & Moticone, and Mitchell, 2011). In the Philippine
2011; Klapper & PAnos, 2011) concluded context, Sucuahi (2013) found out that
that the older generations were among the educational attainment showed a positive
highest with low levels of financial and significant influence on financial
literacy.In addition, Kehiaian and Williams literacy yet gender cannot predict the
(2012) studied the financial literacy and financial literacy level among micro
characteristics of Chapter 13 debtors. They entrepreneurs in Davao City. Guliman
found a positive association between (2015), in his evaluation of the financial
financial literacy and financial education, literacy of MSME owners in Iligan, he was
years of work experience and level of able to find a positive and significant
personal income. relationship between college education and
financial knowledge while years in operation
A number of other studies (Samkin et al., posed a negative relationship to financial
2014; Traft et al., 2013; Lusardi and skills. Also, a college degree relative to
Mitchell 2011; Fernero and Moticone, 2011; being a high school graduate increases the
Houston, 2012) established that educational likelihood of having a higher level of
levels were positively correlated with high financial literacy.
financial literacy level compared to those
with lower educational level. Hoe (2010) On one hand, results of the study of
wrote that majority of SMEs were managed Monticone (2010) indicated that “wealth has
and most of the owners did not have formal a positive but small effect on the degree of
qualifications to manage their businesses. financial knowledge” (p. 403). Bhushan and
The manner, in which they manage finances, Medury (2013) also found out that financial
depends on their education, practical literacy level is not only affected by gender
experience and any prior training. Sena, and education but also associated to income,
Scott and Roper (2012) demonstrated that nature of employment and place of work.
there was a noticeable different between Nonetheless, Bhushan and Medury (2013)
women entrepreneurs with formal education found out that financial literacy is not related
qualification and those who did not have to age and geographic region. Previous
formal education when it comes to sourcing research suggested that the level of available
external funding to start a business. resources has an impact on financial
Nofsinger and Wang (2011) explained that behavior, as consumers with less available
experience had a positive impact on how resources may fail to meet all of their
many external funds were granted to the financial obligations, or lack the means to
save (Aizcorbe, Kennickell, & Moore, 2003; Queensland (USQ). The findings suggested
Hilgert et al., 2003). that business students tended to have a better
literacy rate than other students taking
Kehiaian and Williams (2012) studied the non-business disciplines. They also found
financial literacy and characteristics of that financial literacy had a positive
Chapter 13 debtors. They found a positive relationship with income and working
association between financial literacy and experience.Lower levels of financial literacy
financial education, years of work are found among subgroups. They include
experience and level of personal income. those who are non-business majors, in the
Lantara and Kartini (2015) in their study, it lower class ranks, women, under age 30, and
was found that male students, students with have little work experience. (Chen and
economics and business majors, those with a Volpe,1998) it was suggested in their paper
higher income, and longer working that participants with less work experience
experience had a higher financial literacy have high probability of being less
rate. Beal and Delpachitra (2003) surveyed financially knowledgeable than those with
first year students in their first semester of more experience.
studies at the University of Southern

15
CHAPTER TWO: METHODOLOGY
which could be represented numerically.
2.1 RESEARCH DESIGN Quantitative methods emphasize objective
Research Design is the specification of measurements and the statistical,
techniques and processes for obtaining the mathematical analysis of data collected
information required. It is the over-all through polls, questionnaires, and surveys.
operational pattern or framework of the ( Muijs, 2004). Thus, survey and
project which states what data is to be questionnaire methods are used for this
gathered from which source by what research as the best way to measure attitudes
processes. (Green and Tull, 1974) and to describe behavioral patterns.
(Saunders, Lewis and Thornhill, 2003).
This study adopted the descriptive and
historical method of research. According to
Burns and Grove (2003:201), descriptive 2.2 DATA GATHERING INSTRUMENT
research is designed to provide a picture of a The collection of data represents a
situation as it naturally happens. It may be pre-requisite for carrying out a research and
used to justify current practice and make can be derived from a number of sources.
judgment and to develop theories. It helps These sources are classified into secondary
researchers plan and carry out descriptive and primary data (Clarke and Dawson,
studies, designed to provide rich descriptive 1999). Neil (1985) pointed out that
details about people, places, and other secondary data is material that has been
phenomenon. (Hall, 2011). For this study, gathered previously and primary data
descriptive research was used to determine consists of new material collected by the
the awareness and level of knowledge of researcher for the purpose at hand by the use
small restaurants sole proprietors in Baguio of questionnaires, interview schedules,
City about financial accounting and observation, participation etc.
management. Historical Method involves
investigating, recording, analyzing and The primary source of data is the field
interpreting the events of the past for survey conducted by the author by means of
discovering generalization that are helpful in a questionnaire. A questionnaire is a research
understanding the past, understanding the instrument consisting of a series of questions
present, and to a limited extent, in for the purpose of gathering information
anticipating the future. (Best: 1977, p.15). from respondents. Questionnaires can be
thought of as a kind of written interview.
Data were collected using the quantitative (McLeod, 2018) This study uses a
data collection method. Quantitative questionnaire with multiple choice questions
research method is adopted because it allows designed to gauge financial knowledge.
the researcher to get the facts and not
abstract about the aim of dissertation
(Bryman and Bell, 2007). According to 2.3 DATA GATHERING PROCEDURE
Matthews & Ross (2010) quantitative The study’s target respondents are the
research methods are basically applied to the owners of micro-restaurants in Baguio City,
collection of data that is structured and Benguet. This study used the questionnaire
method to collect primary data from the questionnaires specifically on part 1 and part
respondents. Using questionnaire, the 3 of the questionnaire. However, some of the
researchers can gather data quickly from items of the questionnaires were patterned
different respondents around the City of from the questionnaires of dissertations
Baguio. The researchers also used secondary conducted by Musie (2016).
sources such as websites, researches, The following norms for interpretation were
journals, financial statement of the used in the study:
businesses and other materials that improved 1. The level of financial literacy of
the data gathered. The questionnaire owners.
comprised three pages including the cover Likert Limits Interpretation: (Level
sheet. The cover page provided the Scale of Financial Literacy)
respondent with information about the 5 4.21-5.00 VERY HIGH
content, the rationale for the research and LITERACY (VHL)
4 3.40-4.19 HIGH LITERACY
carried a statement of assurance of
(HL)
confidentiality of the results to the 2.60-3.39 MODERATE
3
respondents. It also included the LITERACY (ML)
demographic profile of respondents. 2 1.80-2.59 LOW LITERACY
(LL)
The questionnaire comprised 3 parts, 1 1.00-1.79 NO LITERACY (NL)
demographic profile, level of financial
literacy (i.e. budgeting, borrowing, investing, 2. The annual percentage increase in profit
and record keeping) and the growth. Part 1 is of the business.
the elicited personal and business profile Annual Percentage
where it consisted age, gender, educational SCALE Increase in Profit (%)
attainment, number of workers, number of 10 Above 100%
years in operation. In part 2, Sections A, B, 9 90-100
C, and D of the questionnaire, consisted of 8 79-89
question relating to the use of four financial 7 68-78
concepts of financial literacy. Respondents 6 57-67
were asked if they made use of these 5 46-56
concepts to manage the financial matters of 4 35-45
their micro-restaurants. And in Part 3, it 3 24-34
consists the measures of growth: the annual 2 13-23
increase in percentage of profit annually for 1 1-12
the past years of business operation or the 0 0%
annual business profit of the business for the
past year of operation. The business owners
3. The Annual Business profit of the
can choose to give the annual profit
business.
percentage increase or the exact annual
SCALE ANNUAL BUSINESS
business profit, but they can just rate it using PROFIT (IN MILLION
the scales provided to give respect to their PHP)
choice of confidentiality and privacy. 13 Above 6,500,000
12 6.00 - 6.50
The researcher prepared the items in the 11 5.50 – 6.00

17
10 5.00 - 5.50 5 2.00 - 2.50
9 4.50 – 5.00 4 1.50 - 2.00
8 3.50 - 4.00 3 1.00 - 1.50
7 3.00 - 3.50 2 0.50 - 1.00
6 2.50 - 3.00 1 Below 500,000

2.1 POPULATION AND SAMPLE n=N/(1+Ne2)


The researchers used the simple random =374/ (1+ (364 *.062)
sampling technique in obtaining the n=159.39 or 160
sample size of the respondents. Simple The sample size of 160 owners was used
random sampling is a sampling by the researchers.
technique where every item in the
population has an even chance and
likelihood of being selected in the 2.2 TREATMENT OF THE DATA
sample. The population of the study Primary data is a data observed or
consisted of one group: the owners. collected directly from first-hand
The total population of the study is 364 experience. Published data and the data
owners of micro-restaurants in Baguio collected in the past or other parties are
City. The population was taken from the called secondary data.
mayor’s office of Baguio City. (Businessdictionary.com, n.d.)
To determine the sample size used in the The data collected as responses to the
study, the Yamane’s formula with a 6% questionnaires were tallied and presented
margin of error was used; in tables. The mean of the literacy is
n= N/ (1+Ne2) computed using the weighted mean
(Likert scale).
Where: n= sample size
N= population size
The researchers also utilized the
e= margin of error
descriptive statistics in order to measure
The computation of the sample size is as
the weighted mean and determine the
follows:
Extent to which the respondents rated
their level of financial literacy. Below is There are 4 different financial literacy
the formula used: concepts used in measuring level of
∑ 𝑓𝑥 financial literacy: budgeting, borrowing,
𝜇=
𝑛 investing, and record keeping. Each
value was measured on a five-point
Where: µ= weighted mean Likert-type scale. This was used in
Σ = summation categorizing the gathered data
f = frequency specifically to rank the extent of the
x = weight assigned to scale variables.
n = number of respondents Each question was described by
numerals. The numerals have the following interpretations:
that the association is linear, that one
Likert Interpretation: (Level of Financial variable increases or decreases a fixed
Scale Literacy) amount for a unit increase or decrease in
5 VERY HIGH LITERACY(VHL) the other. In this study we aim to
4 HIGH LITERACY(HL) determine the association between the
3 MODERATE LITERACY (ML) financial literacy of proprietors and the
2 LOW LITERACY(LL) growth of their micro restaurant.
1 NO LITERACY (NL)
In Spearman Rank Correlation, variables
A hypothetical mean range was assigned may be quantitative discrete or ordered
to the scales in each of the items in the categorical such as pain score. The
questionnaires. In order or come up with Spearman Rank Correlation,
the intervals, the highest weight (5) is non-parametric measure, is then used in
deducted to the lowest weight which is this study to test the correlation.
(1). After arriving at the difference (4),
r Interpretation
the difference will be divided by the total (Regression)
number of weight (5), resulting to 0.8. 1.0 Perfect (Positive/Negative)
Correlation
ℎ𝑖𝑔ℎ𝑒𝑠𝑡 𝑟𝑎𝑡𝑒 − 𝑙𝑜𝑤𝑒𝑠𝑡 𝑟𝑎𝑡𝑒 0.80-.099 Very Strong
𝑖𝑛𝑡𝑒𝑟𝑣𝑎𝑙 𝑠𝑐𝑎𝑙𝑒 =
𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑟𝑎𝑡𝑖𝑛𝑔𝑠
(Positive/Negative)
5−1
= = 0.8 Correlation
5
0.60-0.79 Strong (Positive/Negative)
Where 0.8 is constant Correlation
0.40-0.59 Moderate (Positive/Negative)
The interpretation is as follows:
Correlation
Arbituary Descriptive
0.20-0.39 Weak (Positive/Negative)
Values Limits Equivalent Symbol
Correlation
Very High
0.01-0.19 Very weak (Positive/Negative)
5 4.20-5.00 Literacy VHL
Correlation
High
0.0 No Correlation
4 3.40-4.19 Literacy HL
Moderate
3 2.60-3.39 Literacy ML
Low
2 1.80-2.59 Literacy LL
No
1 1.00-1.79 Literacy NL

Correlation denotes association between


two quantitative variables. We assume

19
CHAPTER THREE: RESULTS AND DISCUSSION

Table 1.1: Distribution of respondents


3.1 Presentation, Analysis and
Interpretation Gender N Percentage
This chapter presents the findings, analysis Female 108 67.50%
and interpretation of data gathered by the Male 52 32.50%
researchers through floating of Total 160 100%
questionnaires. These are presented in tables
according to Gender
following the sequence of the specific
research problems regarding the
Relationship of Financial Literacy of Table 1 shows the number of business
proprietors to the Growth of Micro owners according to their gender: female
Restaurants in Baguio City. Present data and male. The respondents totals to a
were studied and documents were examined number of 160. Out of the 160 respondents,
to answer the questions communicated in the 108 or 67.50% consists female respondents
statement of the problem. and 52 or 32.50% represents the male
More specifically, the researchers sought to respondents. This shows that the number of
answer the following questions: (1.)What female respondents is higher by 56 or 35%
are the demographic profile of the compared to the male respondents.
proprietors of Micro restaurants in Baguio
City in terms of: gender, educational Table 1.2: Distribution of respondents
attainment, age and years of operation; according to Educational Attainment
(2.)What is the level of financial literacy of
sole proprietors in terms of: budgeting, Educational n Percentage
borrowing, investing, and record keeping; Attainment
(3.)What is the level of growth of Micro High school 36 22.50%
Restaurants in terms of: annual percentage Graduate
increase in profit and annual business profit; College Graduate 92 57.50%
and (4.) Is there a significant relationship Post Graduate 32 20%
between the financial literacy of proprietors Total 160 100%
and the growth of their business?
Table 2 shows the number of business
Micro-restaurant owner’s profile
owners according to their educational
This section presents, analyzes and
attainment: High School graduate, College
interprets the profile of the business owners
Graduate, Post Graduate. It was evident that
in Baguio City. It aims to answer the
most business owners are college graduate
problem of the study: What are the
with a number totaling 92 or 57.50%, next to
demographic profile of business owners in
it are high school graduates with a number
Baguio city in terms of gender, educational
of 36 or 22.50% and post graduates with a
attainment, age and years of operation.
number totals to 32 or 20%.
PROBLEM 1
THE DEMOGRAPHIC PROFILE OF THE
PROPRIETORS OF MICRO
RESTAURANTS IN BAGUIO CITY IN
TERMS OF:
Table 1.3: Distribution of respondents respondents, 8-9 years of operation with a
according to Age number of 12 or 8% and lastly, with least
number are the businesses with 10 years and
Age n Percentage above with 10 or 6% of the total
18-32 46 28.75% respondents.
33-46 68 42.50%
47-60 38 23.75%
60 and Above 8 5%
Total 160 100%

Table 3 provides the information about the


age of business owners in Baguio City, it
was shown in ranges: 18-32, 33-46, 47-60,
60 and above. Out of the 160 business owner
respondents, 68 or 42.50% are business
owners having ages ranging from 33-46, 46
or 28.75% are business owners having ages
ranging from 18-32, 38 or 23.75% are
business owners having ages of 47-60 and 8
or 5% of the business owners are of ages 60
and above. This suggests that most of the
business owners in Baguio city are of ages
33-46and least business owners are of ages
ranging from 60 and above.

Table 1.4: Distribution of respondents


according to Years of Operation

Years of n Percentage
Operation
2-3 74 46%
4-5 42 26%
6-7 22 14%
8-9 12 8%
10 and Above 10 6%
Total 160 100%

Table 4 shows the length of years that the


business is operating. The result showed that
most of the businesses run by the owners are
2-3 years in operation with a number of 74
or 46% of the total respondents, followed by
the businesses with 4-5 years of operation
with a number of 42 or 26% of the total

21
PROBLEM 2: THE LEVEL OF FINANCIAL LITERACY OF SOLE PROPRIETORS

Table 2.1: Total Level of Financial Literacy of Micro-restaurant owners

Financial Literacy
WM I
Budgeting
i. Mindfulness of restaurant owners/s to develop business objectives to be achieved in a year 3.83 HL
ii. Knowledge and mindfulness of the business in preparing the budget beginning of the 3.65 HL
financial year and review at year end
iii. Ability to budget from a basis for the employee performance contracts 3.61 HL
iv. Ability to form a strong alignment of the budget to the company strategy 3.60 HL
v. Knowledge in making use of budgeting process such as activity-based budgeting, beyond 3.25 ML
budgeting, rolling budget instead of traditional budgeting
AVERAGE 3.59 HL
Borrowing
i. Consideration of cost of borrowing i.e. interest rate before taking on a loan 3.15 ML
ii. Mindfulness in separating the payment of their business loans from personal loan using 3.29 ML
their business money
iii. Ability to split long term and short debt in order to manage its balance sheets 2.85 ML
iv. Restaurant is fully conversant with the process to acquire funding from different financial 2.91 ML
institution
AVERAGE 3.05 ML
Investing
i. Enterprise invest its surplus cash in order to generate more income in the future 3.38 ML
ii. Consider financial measures such as NPV, IRR, ROA is important before committing to an 2.71 ML
investment
iii. Enterprise makes use of third party to conduct investment for the business 2.84 ML
iv. Investing in e-commerce infrastructure such as internet website is critical to the business 3.09 ML
v. Company invests in human capital development e.g. training of staff 3.46 HL
AVERAGE 3.10 ML
Record Keeping
i. We recorded revenues and expenditures, as well as cash and expenses 4.24 VHL
ii. We use formal record books such as journals and ledger 3.74 HL
iii. We prepare income statements as basis in determining the performance of venture 3.75 HL
AVERAGE 3.91 HL
Total 3.37 ML
The table shows that majority of the sole borrowing and investing which are represented
proprietors have high literacy when it comes to by the mean scores of 3.05 and 3.10. The
budgeting and record keeping with the weighted overall result showed that they have moderate
means of 3.59 and 3.91 and the result indicates financial literacy with a total mean score of 3.37
that they have moderate literacy with regards to
Table 2.2: The Level of Growth and Level of Financial Literacy of Micro-restaurant Owners
According to Age

Age 18-32 33-46 47-60 60 and


Above
WM WM WM WM
Budgeting
i. Mindfulness of restaurant owners/s to 3.57 HL 4.18 HL 3.63 HL 3.25 ML
develop business objectives to be achieved in a
year
ii. Knowledge and mindfulness of the business 3.96 HL 3.71 HL 3.26 ML 3.25 ML
in preparing the budget beginning of the
financial year and review at year end
iii. Ability to budget from a basis for the 3.57 HL 3.85 HL 3.32 ML 3.25 ML
employee performance contracts
iv. Ability to form a strong alignment of the 3.78 HL 3.59 HL 3.47 HL 3.25 ML
budget to the company strategy
v. Knowledge in making use of budgeting 3.74 HL 3.24 ML 2.84 ML 2.5 LL
process such as activity-based budgeting,
beyond budgeting, rolling budget instead of
traditional budgeting
Average 3.72 HL 3.71 HL 3.31 ML 3.10 ML
Borrowing
i. Consideration of cost of borrowing i.e. 3.57 HL 3.09 ML 3.11 ML 1.50 ML
interest rate before taking on a loan
ii. Mindfulness in separating the payment of 3.61 HL 3.38 ML 3.05 ML 1.75 ML
their business loans from personal loan using
their business money
iii. Ability to split long term and short debt in 3.39 ML 2.82 ML 2.53 LL 1.50 ML
order to manage its balance sheets
iv. Restaurant is fully conversant with the 3.22 ML 2.97 ML 2.68 ML 1.75 ML
process to acquire funding from different
financial institution
Average 3.45 HL 3.07 ML 2.84 ML 1.62 ML
Investing
i. Enterprise invest its surplus cash in order to 3.83 HL 3.21 ML 3.16 ML 3.25 ML
generate more income in the future
ii. Consider financial measures such as NPV, 3.39 ML 2.59 LL 2.32 LL 1.75 ML
IRR, ROA is important before committing to
an investment
iii. Enterprise makes use of third party to 3.48 HL 2.53 LL 2.63 ML 2.75 ML
conduct investment for the business
iv. Investing in e-commerce infrastructure such 3.70 HL 2.74 ML 3.05 ML 2.75 ML
as internet website is critical to the business
v. Company invests in human capital 3.78 HL 3.32 ML 3.37 ML 3.25 ML
development e.g. training of staff
Average 3.63 HL 2.88 ML 2.91 ML 2.75 ML
Record Keeping
i. We recorded revenues and expenditures, as 4.26 VHL 4.18 HL 4.47 VHL 3.50 HL
well as cash and expenses
ii. We use formal record books such as journals 3.91 HL 3.74 HL 3.58 HL 3.50 HL
and ledger
iii. We prepare income statements as basis in 4.04 HL 3.74 HL 3.47 HL 3.50 HL
determining the performance of venture
Average 4.07 HL 3.88 HL 3.84 HL 3.50 HL
Total average FL 3.69 H 3.34 M 3.17 M 2.72 M
Total average percentage of GROWTH 53% 37% 47% 52%

23
This table shows the relationship of growth and
financial literacy of sole proprietors on the basis INVESTING: Financial literacy levels in
of their age. The results show that 18-32y/o investing of 18-32y/o has the highest weighted
owners have the highest financial literacy and mean advantage having 3.63 WM. Differences
highest growth depicted by the percentage in WM amounts ranges from 0.75 to 0.88 with
growth of 53% followed by other ages, 60y/o and above coming last having 2.75 WM.
consequently. Second highest growth are owners
aging 60 and above with a percentage of 52% RECORD KEEPING: Financial literacy level of
followed by those who are 47-60 yrs. old and 18-32y/o has the highest weighted mean
lastly those 33-46 yrs. Old with percentages of advantage having 4.07 WM. Differences in WM
47% and 37%. On the other hand, the trend of amounts ranges from 0.01 to 0.62 with 60y/o
financial literacy starts the highest as with the and above coming last having 3.50 WM.
youngest and decreases as the age increases.
Total average shows that 18-32y/o owners (3.72
BUDGETING: Financial literacy levels in WM) have the only “High Literacy” among all,
budgeting of 18-32y/o has the highest weighted followed by33-46y/o (3.38WM) with “Moderate
mean advantage having 3.72 WM. Differences Literacy”, then 47-60y/o (3.22WM) also with
in WM amounts ranges from 0.01 to 0.62 with “Moderate Literacy”, and lastly, 60y/o and
60y/o and above coming last having 3.10 WM. above (2.74WM) with “Moderate Literacy”.
The results support the study that financial
BORROWING: Financial literacy level in literacy was found to decrease with age and that
borrowing of 18-32y/o has the highest weighted older adults tend to have lower financial literacy
mean advantage having 3.45 WM. Differences and that younger adults tend to have higher level
in WM amounts ranges from 0.38 to 1.83 with of financial literacy. (Lusardi, 2010)
60y/o and above coming last having 1.62 WM.

Table 2.3: The Level of Growth and Level of Financial Literacy of Micro-restaurant Owners
According to Gender

Female Male
GENDER WM WM
Budgeting
i. Mindfulness of restaurant owners/s to develop business objectives to be 3.76 HL 3.96 HL
achieved in a year
ii. Knowledge and mindfulness of the business in preparing the budget 3.59 HL 3.77 HL
beginning of the financial year and review at year end
iii. Ability to budget from a basis for the employee performance contracts 3.59 HL 3.65 HL
iv. Ability to form a strong alignment of the budget to the company strategy 3.59 HL 3.62 HL
v. Knowledge in making use of budgeting process such as activity-based 3.28 ML 3.19 ML
budgeting, beyond budgeting, rolling budget instead of traditional budgeting
Average 3.56 HL 3.64 HL
Borrowing
i. Consideration of cost of borrowing i.e. interest rate before taking on a loan 3.24 ML 2.96 ML
ii. Mindfulness in separating the payment of their business loans from personal 3.28 ML 3.31 ML
loan using their business money
iii. Ability to split long term and short debt in order to manage its balance 2.85 ML 2.85 ML
sheets
iv. Restaurant is fully conversant with the process to acquire funding from 2.89 ML 2.96 ML
different financial institution
Average 3.06 ML 3.02 ML
Investing
i. Enterprise invest its surplus cash in order to generate more income in the 3.33 ML 3.46 HL
future
ii. Consider financial measures such as NPV, IRR, ROA is important before 2.72 ML 2.69 ML
committing to an investment
iii. Enterprise makes use of third party to conduct investment for the business 2.81 ML 2.88 ML
iv. Investing in e-commerce infrastructure such as internet website is critical to 2.98 ML 3.31 ML
the business
v. Company invests in human capital development e.g. training of staff 3.33 ML 3.73 HL
Average 3.04 ML 3.22 ML
Record Keeping
i. We recorded revenues and expenditures, as well as cash and expenses 4.22 VHL 4.27 VHL
ii. We use formal record books such as journals and ledger 3.65 HL 3.92 HL
iii. We prepare income statements as basis in determining the performance of 3.72 HL 3.81 HL
venture
Average 3.86 HL 4.00 HL
TOTAL AVERAGE FINANCIAL LITERACY 3.34 ML 3.43 HL
TOTAL AVERAGE PERCENTAGE OF GROWTH 43% 49%

Table 5 above shows the difference between INVESTING: Female and male financial
male and female in terms of their financial literacy level on investing are still on the same
literacy and its impact to the growth of their level both bearing a “Moderate Literacy” with
business. The total average shows that male male owners having .18 weighted mean greater.
owners have a higher literacy (“High RECORD KEEPING: Female and male
Literacy”)with a mean of 3.47 than the female financial literacy level on Record keeping are
owners who have a (“Moderate Literacy”) with still on the same level both bearing a “High
mean score of 3.38. The result corresponds that Literacy” with male owners having .14 weighted
restaurants of males have higher growth than mean greater.
females. The total average differs with male owners
BUDGETING: Female and male financial having .09 weighted mean greater. Female
literacy level on budgeting is on the same level owners have a “Moderate Literacy” while male
both bearing a “High Literacy” with male owners have “High Literacy” according to this
owners having .08 weighted mean greater. measure.
BORROWING: Female and male financial This result supports the study that women tend
literacy level on borrowing are still on the same to be less financially literate than men because
level both bearing a “Moderate Literacy” with “men specialize in making household financial
female owners having .04 weighted mean decisions thereby acquiring financial knowledge
greater. and women specialize in other household
functions” (Fonseca, et al, 2012)

Table 2.4: The Level of Growth and Level of Financial Literacy of Micro-restaurant Owners
According to Educational Attainment
Educational Attainment Highschool College Graduate Post Graduate
Graduate
WM WM WM
Budgeting
i. Mindfulness of restaurant owners/s to develop business 3.61 HL 3.85 HL 3.75 HL
objectives to be achieved in a year
ii. Knowledge and mindfulness of the business in 3.22 ML 3.83 HL 3.93 HL
preparing the budget beginning of the financial year and
review at year end

25
iii. Ability to budget from a basis for the employee 3.22 ML 3.78 HL 3.56 HL
performance contracts
iv. Ability to form a strong alignment of the budget to 3.33 ML 3.72 HL 3.96 HL
the company strategy
v. Knowledge in making use of budgeting process such as 2.94 ML 3.48 HL 2.94 ML
activity-based budgeting, beyond budgeting, rolling
budget instead of traditional budgeting
Average 3.27 ML 3.73 HL 3.63 HL
Borrowing
i. Consideration of cost of borrowing i.e. interest rate 2.83 ML 3.22 ML 3.91 HL
before taking on a loan
ii. Mindfulness in separating the payment of their business 2.94 ML 3.41 HL 3.89 HL
loans from personal loan using their business money
iii. Ability to split long term and short debt in order to 2.33 L 3.09 ML 2.95 ML
manage its balance sheets
iv. Restaurant is fully conversant with the process to 2.78 ML 2.96 ML 2.94 ML
acquire funding from different financial institution
Average 2.72 ML 3.17 ML 3.42 HL
Investing
i. Enterprise invest its surplus cash in order to generate 3.17 ML 3.57 HL 3.66 ML
more income in the future
ii. Consider financial measures such as NPV, IRR, ROA is 2.50 L 3.02 ML 2.96 L
important before committing to an investment
iii. Enterprise makes use of third party to conduct 2.61 ML 2.91 ML 2.88 ML
investment for the business
iv. Investing in e-commerce infrastructure such as internet 2.94 ML 3.13 ML 3.93 ML
website is critical to the business
v. Company invests in human capital development e.g. 2.94 ML 3.70 HL 3.78 ML
training of staff
Average 2.83 ML 3.27 ML 3.44 HL
Record Keeping
i. We recorded revenues and expenditures, as well as cash 3.94 HL 4.30 VHL 4.38 VHL
and expenses
ii. We use formal record books such as journals and ledger 3.44 HL 3.87 HL 3.69 HL
iii. We prepare income statements as basis in determining 3.39 ML 3.83 HL 3.94 HL
the performance of venture
Average 3.59 HL 4.00 HL 4.00 HL
Total average FL 3.07 ML 3.51 HL 3.31 HL
TOTAL PERCENTAGE OF GROWTH 43% 48% 38%

This table shows the different level of growth WM lesser), and before High School Graduates
and financial literacy of sole proprietors (0.46 WM lesser).
according to their educational attainment of BORROWING: Financial Literacy level in
owners. The results show that Post Graduate borrowing of Post Graduates have the highest
owners (“High Literacy”) have a higher literacy advantage coming before College Graduates
than College Graduates (“High literacy”) by a (0.25 WM lesser), and before High School
small decimal amount, and High School Graduate (0.70 WM lesser)
Graduates by a relatively high decimal amount. INVESTING: Financial Literacy level in
However, basing on the growth of their investing of Post Graduates have the highest
businesses, college graduates have higher advantage coming before College Graduates
growth compared to the others with a growth (0.17 WM lesser), and before High School
percentage of 48%. Graduate (0.44 WM lesser)
BUDGETING: Financial Literacy level in RECORD KEEPING: Financial Literacy level in
budgeting of College Graduates have the highest record keeping of both Post Graduates and
advantage coming before Post Graduates (0.10 College Graduates gets the highest WM and then
followed by High School Graduates (0.41 WM Graduates (3.10WM) with “MODERATE
lesser) LITERACY”. This result supports the study that
The total average shows that Post Graduates educational levels were positively correlated
have the highest weighted mean (3.62WM) with with high financial literacy level compared to
“HIGH LITERACY”, followed by College those with lower educational level. (Samkin et
Graduates (3.54WM), and then High School al., 2014)

Table 2.5: The Level of Growth and Level of Financial Literacy of Micro-restaurant Owners
According to Years of Operation

Years of Operation 2-3 4-5 6-7 8-9 10-11


WM WM WM WM WM
Budgeting
i. Mindfulness of restaurant owners/s to 3.62 HL 4.05 HL 3.91 HL 3.50 HL 4.60 VHL
develop business objectives to be achieved
in a year
ii. Knowledge and mindfulness of the 3.41 HL 3.81 HL 4.00 HL 3.50 HL 4.20 VHL
business in preparing the budget
beginning of the financial year and review
at year end
iii. Ability to budget from a basis for the 3.49 HL 3.57 HL 3.64 HL 3.83 HL 4.40 VHL
employee performance contracts
iv. Ability to form a strong alignment of 3.46 HL 3.67 HL 3.73 HL 3.67 HL 4.00 HL
the budget to the company strategy
v. Knowledge in making use of budgeting 3.16 ML 3.19 ML 3.18 ML 3.50 HL 4.00 HL
process such as activity-based budgeting,
beyond budgeting, rolling budget instead
of traditional budgeting
Average 3.43 HL 3.66 HL 3.69 HL 3.60 HL 4.24 VHL
Borrowing
i. Consideration of cost of borrowing i.e. 3.03 ML 3.38 ML 3.36 ML 3.00 ML 2.80 ML
interest rate before taking on a loan
ii. Mindfulness in separating the payment 3.14 ML 3.48 HL 3.64 HL 2.67 ML 3.60 HL
of their business loans from personal loan
using their business money
iii. Ability to split long term and short 2.73 ML 3.05 ML 3.27 ML 2.33 LL 2.60 ML
debt in order to manage its balance sheets
iv. Restaurant is fully conversant with the 2.84 ML 2.90 ML 3.45 HL 3.83 HL 3.60 HL
process to acquire funding from different
financial institution
Average 2.93 ML 3.20 ML 3.43 HL 2.96 ML 3.15 ML
Investing
i. Enterprise invest its surplus cash in 3.11 ML 3.67 HL 3.55 HL 3.17 ML 4.00 HL
order to generate more income in the
future
ii. Consider financial measures such as 2.62 ML 2.90 ML 2.73 ML 2.33 LL 3.00 ML
NPV, IRR, ROA is important before
committing to an investment
iii. Enterprise makes use of third party to 2.49 LL 3.19 ML 3.18 ML 2.50 LL 3.60 HL
conduct investment for the business
iv. Investing in e-commerce infrastructure 2.62 ML 3.52 HL 3.64 HL 2.83 ML 3.80 HL
such as internet website is critical to the
business
v. Company invests in human capital 3.16 ML 3.81 HL 3.91 HL 3.57 HL 3.00 ML
development e.g. training of staff
Average 2.80 ML 3.42 HL 3.40 ML 2.88 ML 3.48 HL

27
Record Keeping
i. We recorded revenues and expenditures, 4.19 HL 4.33 VHL 4.05 HL 4.00 HL 4.00 HL
as well as cash and expenses
ii. We use formal record books such as 3.46 HL 4.10 HL 4.18 HL 3.33 ML 3.80 HL
journals and ledger
iii. We prepare income statements as basis 3.73 HL 3.76 HL 4.09 HL 3.33 ML 3.60 HL
in determining the performance of venture
Average 3.79 HL 4.06 HL 4.11 HL 3.56 HL 3.80 HL
Total Average 3.19 ML 3.55 HL 3.64 HL 3.09 ML 3.72 HL
Total average percentage of GROWTH 50% 38% 36% 32% 63%
operation coming last at 2.80 WM.
This table shows the relationship of growth
and financial literacy of sole proprietors RECORD KEEPING: Financial literacy
according to years of operation of the levels in borrowing of 6-7 years of operation
micro-restaurants. The results show that have the highest weighted mean advantage
owners of micro-restaurants with 6-7 years having 4.11WM. Differences in WM
of operation has the highest level of amounts range from 0.05 to 0.55 with 8-9
financial literacy, followed by 10-11 years, years of operation coming last at 3.56 WM.
and 4-5 years having pegged a “High
Literacy”, while those with 2-3 and 8-9 The total average shows that owners of
years of operation have the lowest level with micro-restaurants with 10-11 years of
a “Moderate Literacy”, respectively. With operation has the highest level of financial
regards to the growth, micro restaurants with literacy (3.67WM) with a “High Literacy”
10-11 years of operation have the highest while those with 2-3 years of operation have
growth with a percentage of 63% followed the lowest level (3.24WM) with a “Moderate
by 2-3 yrs, 4-5 yrs, 6-7 yrs depicted by the Literacy”. These results support the study
percentages of 50%, 38% 36% and 32%. that there is a a positive association between
financial literacy and years of work
BUDGETING: Financial literacy levels in experience (Kehiaian and Williams, 2012)
budgeting of 10-11 years of operation have expressing that the more the years of
the highest weighted mean advantage having operation, the more knowledge and
4.24 WM. Differences in WM amounts experience, thus a higher level of financial
range from 0.55 to 0.81 with 2-3 years of literacy
operation coming last having 3.43 WM. This
could imply that budgeting is the key to
longer years of operation.

BORROWING: Financial literacy levels in


borrowing of 6-7 years of operation have the
highest weighted mean advantage having
3.43WM. Differences in WM amounts range
from 0.23 to 0.50 with 2-3 years of
operation coming last at 2.93 WM.
INVESTING: Financial literacy levels in
borrowing of 10-11 years of operation have
the highest weighted mean advantage having
3.48WM. Differences in WM amounts range
from 0.06 to 0.68 with 2-3 years of
PROBLEM 3: THE LEVEL OF GROWTH OF MICRO RESTAURANTS
Table 3.1: Level of growth of Micro Restaurants in Annual Percentage Increase in Profit

Demographic Profile Annual Percentage Increase in Profit Average


Age
18-32 53.04%
33-46 37.41%
47-60 47.19%
60 and Above 52.08% 47.43%

Gender
Female 42.83%
Male 49.38% 46.10%

Educational Attainment
High school 42.69%
College 48.34%
Post Grad 37.78% 42.94%

Years of Operation
2-3 50.48%
4-5 38.20%
6-7 35.66%
8-9 31.85%
10 and Above 62.93% 43.82%

This table shows the distribution of the of 53.04 among other age ranges, male
annual percentage increase in profits of the owners showed the higher increase in profit
micro-restaurants of respondents. It resulted of 49.38%, College graduates showed the
to an average percentage increase in profits highest with 48.34% increase, and 10 years
of 44.96 without considering the intervening and above in operation with a 62.93%
variables. Owners aged 18-32 showed the increase.
highest Annual percentage increase in profit

29
PROBLEM 4: THE SIGNIFICANT RELATIONSHIP BETWEEN THE FINANCIAL LITERACY
OF PROPRIETORS AND THE GROWTH OF THEIR BUSINESS

Table 4.1: Correlation of Financial Literacy and Growth


Total Total f Ave. Ave. Rank Rank d d^2 r I
FL Growth FL Growth (FL) (Growth)
Female 361.18 46.26 108 3.34 43% 1 1 0 0 1 Perfect
Positive
Male 178.47 25.68 52 3.43 49% 2 2 0 0
Correlation

High school 110.47 15.37 36 3.07 43% 1 2 -1 1 0.5


College 323.29 44.47 92 3.51 48% 3 3 0 0
Moderate
Post Grad 105.88 12.09 32 3.31 38% 2 1 1 1 Positive
Correlation

18-32 169.88 24.40 46 3.69 53% 4 4 0 0 0.2


33-46 227.41 25.44 68 3.34 37% 3 1 2 4
Weak
47-60 120.59 17.93 38 3.17 47% 2 2 0 0 Positive
Correlation
60 and 21.76 4.17 8 2.72 52% 1 3 -2 4
Above

2-3 236.12 37.35 74 3.19 50% 2 4 -2 4 0.6


4-5 149.18 16.04 42 3.55 38% 3 3 0 0
Strong
6-7 80.12 7.85 22 3.64 36% 4 2 2 4 Positive
Correlation
8-9 37.06 3.82 12 3.09 32% 1 1 0 0
10 and 37.18 6.29 10 3.72 63% 5 5 0 0
Above

6 ∑ 𝑑2 gender, educational attainment, age, and years of


𝑟 =1− operation. Overall, this shows that there is a
n(n2 − 1)
positive correlation/ relationship between the
The Table 4.1 shows the relationship between variables, which means that as the level of
the financial literacy of proprietors and their financial literacy increases, there is growth.
annual increase in growth with respect of their
CHAPTER FOUR: CONCLUSION AND RECOMMENDATION
4. .From the findings, the results showed an
This part of the research presents the summary analysis that there is a significant relationship
of the study including the findings, conclusions, between growth and financial literacy of sole
and recommendations as websites, researches, proprietors.
journals, financial statement of the businesses
and other materials that improved the data
gathered. 4.2 RECOMMENDATIONS
For thriving business and entrepreneurship it is
necessary to have favorable climate and
4.1 CONCLUSION environment together with the skills and
From the findings, the researchers conclude the knowledge of owners to manage their business
following: and grow further in areas that they are lacking.
(See appendix)
1. Generally, the analysis identified differences
on the financial literacy of owners with regards We have limitations with regards to the sample
to their educational attainment level, age, and size because of the difficulty of collecting data
years of operation which mean that these factors on questionnaires due to reluctance of the
affect the level of financial literacy of sole targeted respondents to participate in the study.
proprietors in business, whereas, age and years Most sole proprietors are busy serving clients
of operation do not always guarantee an effect hence, refuse to answer the questionnaire.
on the level of literacy. Furthermore, some respondents believed some
of the information sought was confidential and
2. In terms of level of financial literacy, the hence they did not fill the questionnaire. We
overall result showed that they have “moderate have difficulty in getting their income because
financial literacy” with a total mean score of some would refuse to disclose their financial
3.37. This research shows that most of the statements. The time period covered by the
proprietors of small business restaurants in study was also limited. Thus, response rate of
Baguio City are financially literate. the study was low. Lastly, the sample studied
Total average shows that 18-32y/o owners (3.72 was restricted to the sample size alone.
WM) have the highest level with a “High Nevertheless, this research could be a starting
Literacy” among other age groups, female point for future research papers that could be
owners have a “Moderate Literacy” while male useful for educational programs for increasing
owners have “High Literacy”, post graduates financial literacy among sole proprietors. This
have the highest weighted mean (3.62WM) with will enable small business restaurants to achieve
“High Literacy”, and owners of growth with better operation, improved
micro-restaurants with 10-11 years of operation competition and enhanced skills and knowledge.
has the highest level of financial literacy
(3.67WM) with a “High Literacy” Our results are encouraging and should be
validated by larger sample size and also further
3. In terms of growth, the annual percentage research can be done testing the impact of other
increase in profits of the micro-restaurants of variables that are not covered in this study to
respondents resulted to an average percentage ensure more reliability and accuracy of the data
increase in profits of 44.96 without considering as well as the results.
the intervening variables

31
Appendix

Gender Female Male f Interpret


WM Description WM Description
Budgeting ά=5.32
i 3.76 H 3.96 H
ii 3.59 H 3.77 H
Failed to
iii 3.59 H 3.65 H 0.256873
Reject Ho
iv 3.59 H 3.62 H
v 3.28 M 3.19 M
Borrowing ά=5.99
i 3.24 M 2.96 M
ii 3.28 M 3.31 M Failed to
iii 2.85 M 2.85 M 0.091528714 Reject Ho
iv 2.89 M 2.96 M
Investing ά=5.32
i 3.33 M 3.46 H
ii 2.72 M 2.69 M
Failed to
iii 2.81 M 2.88 M 0.608815
Reject Ho
iv 2.98 M 3.31 M
v 3.33 M 3.73 H
Record Keeping ά=7.71
i 4.22 VH 4.27 VH
Failed to
ii 3.65 H 3.92 H 0.356488
Reject Ho
iii 3.72 H 3.81 H
ά=4.15
Overall 56.85 58.35 Failed to
0.350082
Reject Ho
Highschool College
Educational f Interpret
Graduate Graduate Post Graduate
Attainment
WM WM WM
Budgeting ά=3.89
i 3.61 3.85 3.75
ii 3.22 3.83 3.63
iii 3.22 3.78 3.56 4.47281 Reject Ho
iv 3.33 3.72 3.56
v 2.94 3.48 2.94
Borrowing ά=4.26
i 2.83 3.22 3.31
ii 2.94 3.41 3.31 Failed to
3.53332
iii 2.33 3.09 2.75 Reject Ho
iv 2.78 2.96 2.94
Investing ά=3.89
i 3.17 3.57 3.06
ii 2.50 3.02 2.06
Failed to
iii 2.61 2.91 2.88 1.82453
reject Ho
iv 2.94 3.13 3.13
v 2.94 3.70 3.38
Record Keeping ά=5.14
i 3.94 4.30 4.38
Failed to
ii 3.44 3.87 3.69 1.749265
Reject Ho
iii 3.39 3.83 3.94
ά=3.19
Overall 52.17 59.65 56.25
4.05403 Reject Ho

33
60 and
f Interpret
Age 18-32 33-46 47-60 Above
WM WM WM WM
Budgeting ά=3.24
i 3.57 4.18 3.63 3.25
ii 3.96 3.71 3.26 3.25
iii 3.57 3.85 3.32 3.25 5.485557 Reject Ho
iv 3.78 3.59 3.47 3.25
v 3.74 3.24 2.84 2.50
Borrowing ά=3.49
i 3.57 3.09 3.11 1.50
ii 3.61 3.38 3.05 1.75
52.60075 Reject Ho
iii 3.39 2.82 2.53 1.50
iv 3.22 2.97 2.68 1.75
Investing ά=3.24
i 3.83 3.21 3.16 3.25
ii 3.39 2.59 2.32 1.75
iii 3.48 2.53 2.63 2.75 4.438778 Reject Ho
iv 3.70 2.74 3.05 2.75
v 3.78 3.32 3.37 3.25
Record Keeping ά=4.07
i 4.26 4.18 4.47 3.50
Failed to
ii 3.91 3.74 3.58 3.50 1.714311
Reject Ho
iii 4.04 3.74 3.47 3.50
62.78 56.85 53.95 46.25 ά=2.75
Overall
9.422029 Reject Ho
2-3 4-5 6-7 8-9 10-11 f Interpret
Years of Operation
WM WM WM WM WM
Budgeting ά=2.87
i 3.62 4.05 3.91 3.50 4.60
ii 3.41 3.81 4.00 3.50 4.20
Reject
iii 3.49 3.57 3.64 3.83 4.40 7.323254958
Ho
iv 3.46 3.67 3.73 3.67 4.00
v 3.16 3.19 3.18 3.50 4.00
Borrowing ά=3.06
i 3.03 3.38 3.36 3.00 2.80
ii 3.14 3.48 3.64 2.67 3.60 Reject
4.136010426
iii 2.73 3.05 3.27 2.33 2.60 Ho

iv 2.84 2.90 3.45 1.83 3.60


Investing ά=2.87
i 3.11 3.67 3.55 3.17 4.00
ii 2.62 2.90 2.73 2.33 3.00
Reject
iii 2.49 3.19 3.18 2.50 3.60 3.793823725
Ho
iv 2.62 3.52 3.64 2.83 3.80
v 3.16 3.81 3.91 3.17 3.00
Record Keeping ά=3.48
i 4.19 4.33 4.45 4.00 4.00 Failed to
ii 3.46 4.10 4.18 3.33 3.80 2.404472006 Reject
iii 3.73 3.76 4.09 3.33 3.60 Ho
54.24 60.38 61.91 52.50 62.60 ά=2.49
Overall Reject
5.157891
Ho

35
Saint Louis University
School of Accountancy, Management, Computing, and Information Studies
Baguio City

Dear Respondents,

The undersigned are the 4th year students of BS Accountancy/Management Accounting of Saint Louis
University currently conducting a research in partial fulfilment of our requirement in Thesis on the
“RELATIONSHIP OF FINANCIAL LITERACY OF PROPRIETORS TO THE GROWTH OF
MICRO RESTAURANTS IN BAGUIO CITY”.

May we ask for your support and cooperation in our pursuit for a quality outcome by answering
thoroughly the questions. Rest assured all answers therein will be held strictly confidential and for
academic purposes only.

Thank you for your kind participation.

Respectfully yours,

CARIÑO, Pamela D. DANGO, Kara O.

PUDAY, Yvonne Daphne C. VICENTE, Vina D.

Noted by,

BIALNO, Erlinda G.
Adviser
Saint Louis University
School of Accountancy, Management, Computing, and Information Studies
Baguio City

Dear Ma’am/Sir,
Greetings!

The undersigned are the 4th year students of BS Management Accounting of Saint Louis University
currently conducting a research in partial fulfilment of our requirement in accounting 403a Management
Consultancy 1 (THESIS) on the “RELATIONSHIP OF FINANCIAL LITERACY OF
PROPRIETORS TO THE GROWTH OF RESTAURANTS IN BAGUIO CITY”.

In connection with this, we would like to ask your help in providing necessary data for our study,
particularly the information on the population size of Small-Medium-Enterprises (SMEs) Food
Restaurant in Baguio City.

We would like to appreciate your assistance and support in this particular research endeavor.

Thank you.

Respectfully yours,

CARIÑO, Pamela D. DANGO, Kara O.

PUDAY, Yvonne Daphne C. VICENTE, Vina D.

BIALNO, Erlinda G.
Adviser

37
Saint Louis University
School of Accountancy, Management, Computing, and Information Studies
Baguio City

Dear Respondents,

The undersigned are the 4th year students of BS Accountancy/Management Accounting of Saint Louis
University currently conducting a research in partial fulfilment of our requirement in Thesis on the
“RELATIONSHIP OF FINANCIAL LITERACY OF PROPRIETORS TO THE GROWTH OF
MICRO RESTAURANTS IN BAGUIO CITY”.

May we ask for your support and cooperation in our pursuit for a quality outcome by answering
thoroughly the questions. Rest assured all answers therein will be held strictly confidential and for
academic purposes only.

Thank you for your kind participation.

Respectfully yours,

CARIÑO, Pamela D. DANGO, Kara O.

PUDAY, Yvonne Daphne C. VICENTE, Vina D.

BIALNO, Erlinda G.
Adviser

NAME OF OWNER (optional): GENDER: MALE AGE: 18-32 y/o


EDUCATIONAL ATTAINMENT High School Graduate FEMALE 33-46 y/o
College Graduate 47-60 y/o
Post Graduate 60 and above

CURRENT NUMBER OF EMPLOYEES: YEARS OF OPERATION:

I. LEVEL OF FINANCIAL LITERACY


GENERAL INSTRUCTION SCALE
 Please mark the appropriate box with an X. 5 Very High (VH)
 Please rate the following statements as per scale indicated: 4 High (H)
3 Moderate (M)
2 Low (L)
1 Very Low (VL)
SECTION A: BUDGETING
VH H M L VL
i. Mindfulness of restaurant owners/s to develop business
objectives to be achieved in a year
ii. Knowledge and mindfulness of the business in preparing the
budget beginning of the financial year and review at year end
iii. Ability to budget from a basis for the employee performance
contracts
iv. Ability to form a strong alignment of the budget to the
company strategy
v. Knowledge in making use of budgeting process such as
activity-based budgeting, beyond budgeting, rolling budget
instead of traditional budgeting

SECTION B: BORROWING
VH H M L VL
vi. Consideration of cost of borrowing i.e. interest rate before
taking on a loan
vii. Mindfulness in separating the payment of their business
loans from personal loan using their business money.
viii. Ability to split long term and short debt in order to manage
its balance sheets
ix. Ability to be fully conversant with the process to acquire
funding from different financial institution

SECTION C: INVESTING
VH H M L VL
x. Knowledge of restaurant in investing its surplus cash in order
to generate more income in the future
xi. Familiarity with financial measures such as NPV, IRR, ROA
before committing to an investment
xii. Ability to use third party to conduct investment for the
business.
xiii. Awareness of the criticality of e-commerce infrastructure and
ability to invest in such
e.g. internet website
xiv. Awareness of the importance of human capital and ability to
invests in human capital development e.g. training of staff

SECTION D: RECORD KEEPING


VH H M L VL
i. Knowledge in recording revenues and expenditures, as well
as cash and expenses
ii. Familiarity in using formal record books such as journals and
ledger
iii. Consideration in preparing income statements as basis in
determining the performance of venture

39
INSTRUCTIONS: Complete the table with the appropriate data needed.
Choose between A (Percentage increase in Profit) and
II. GROWTH B (Annual Business Profit) in answering.
A. Percentage Increase in Profit
Please specify the increase in profit of your business for the past years of your operation computed as:
Percentage Increase in Profit = Current Profit- Prior Profit X 100%
Prior Profit
(If the business operates more than 10 years, please notify the interviewer for the additional data needed.)

Years of Operation Annual Percentage Increase in Profit


SCALE Annual Percentage
Increase in Profit 1st year-2nd year
(%)
2nd year-3rd year
12 Above 100%
11 91-100% 3rd year-4th year
10 81-90%
4th year-5th year
9 71-80%
8 61-70% 5th year-6th year
7 51-60%
6 41-50% 6th year-7th year
5 31-40% 7th year-8th year
4 21-30%
3 11-20% 8th year-9th year
2 1-10% 9th year-10th year
1 No growth

B. Annual Business Profit


Please specify the annual profit of your business for the past years of your operation.
(If the business operates more than 10 years, please notify the interviewer for the additional data needed.)

YEARS OF ANNUAL BUSINESS PROFIT


SCALE ANNUAL OPERATION
BUSINESS Year 1
PROFIT ( IN
MILLION PHP) Year 2
12 2.75 -3,000,000 Year 3
11 2.50 -2.75
10 2.25 -2.50 Year 4
9 2.00 -2.25 Year 5
8 1.75 -2.00
7 1.50 -1.75 Year 6
6 1.25 -1.50 Year 7
5 1.00 -1.25
4 .75 -1.00 Year 8
3 .50 -.75
Year 9
2 .25 -.50
1 Below 250,000 Year 10
REFERENCES
Abdulrasheed A., Khadijat A., And Oyebola F. E,(2012) Accounting Principles Of
Small Enterprises In Ilorin Metropolis Of Kwara State, Nigeria Research Journal
Of Finance And Accounting Www.Iiste.Org Issn 2222-1697 (Paper) Issn
2222-2847 (Online) Vol 3, No 2, 2012

Aizcorbe, A. M., Kennickell, A. B., & Moore, K. B. (2003). Recent Changes In U.S.
Family Finances: Evidence From The 1998 And 2001 Survey Of Consumer
Finances. Federal Reserve Bulletin, 89 (January), 1-32.

Akesinro, S.A (2016), The Imperatives Of Accounting And Financial Records In The
Development Of Small Scale Enterprises In Nigeria. Research Journal Of Finance
And Accounting Www.Iiste.Org Issn 2222-1697 (Paper) Issn 2222-2847 (Online)
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