Financial indicators for measuring and improving the emerging entrepreneurial ventures’ performance

Abstract

This study offers a critical analysis of the financial indicators for measuring and improving the emerging entrepreneurial ventures’ performance in South Africa. The study was motivated by the fact that the effective use of the required financial performance measure is a challenge that most of the emerging entrepreneurial ventures are still grappling with. By addressing such a gap, the study not only aims to discern the improvement strategies that must be adopted, but also to enrich the existing literature and theories on entrepreneurial financial management. To accomplish that, the study uses integrative review as the primary qualitative method for the study. Despite certain limitations, outcomes of integrative review indicated that financial statements’ analysis still provides relevant measures for evaluating and improving the emerging entrepreneurial venture’s financial performance to achieve its corporate mission. Financial statement analysis is often accompanied with the use of more specific relevant financial performance measures and target analysis like profitability and liquidity analysis. Using the provided accounting and financial information, most of profitability analysis often entails analysis of gross profit margin, operating profit margin, net profit margin, return on capital employed and return on equity. Liquidity analysis utilizes financial performance measures and targets like cash, quick and current ratios as well as inventory, receivables and payables turnover periods. But even if these financial performance measures and targets are relevant for measuring and improving the performance of the emerging entrepreneurial venture to achieve its corporate mission, future studies must still explore the entrepreneurial financial measurement framework that can be adopted for improving the effective performance of the emerging entrepreneurial ventures.