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

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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
1.1 INTRODUCTION
Most entrepreneurs enter this industry with
enough capital to open the restaurant doors
but not enough to sustain the initial or latter
few months of a restaurant’s life span. With
the abundance of reasons for the either the
failure or growth of the business, importance
is focused more on the economic perspective.
The focus of this research is to examine the
relationship of financial literacy with the
growth of micro restaurants in Baguio City.
Studies on financial literacy have grown in
importance in the recent years. Based on the
search results using EBSCOhost Online
Research Databases, more than 2,600
Academic Journals were published with
financial literacy as keywords from January
2009 until December 2014. This goes to
show that many academic researchers saw
the importance of financial literacy to the
security of the financial sector .(Guliman,
2015).
According to Remund (2010), the
operational definition of financial literacy is
“having the knowledge, skills and
confidence to make responsible financial
decisions” (p. 278). This means that
financial knowledge alone is not enough to
become financially literate, but one needs to
have financial skills and confidence which
could translate to responsible decision
making. Sulaiman adds that today’s
financial markets and businesses have
become progressively complex. It is
important to identify ways to enable
organizations, especially small businesses
that have a significant impact on the
economy, to access the financial knowledge
and capabilities that are needed to make
good management decisions. As earlier
contended by Greenspan (2005), the
financial world today is much more complex
than it was before. Thus, it is a must to gain
more comprehensive knowledge on a range
of products and services offered by financial
institutions including the impact of interests
and the consequences of mismanaging credit
accounts. .
Restaurants are good businesses in the
Philippines because Filipinos love to eat and
these restaurants cater to their needs for
convenience, quick preparation, and
ready-to-eat meal options. Based on the
latest data from the Philippine Economic
Zone Authority (PEZA), as of the end of the
year 2017, six percent of business
establishments in Baguio City are in food
business like restaurants, cafes, cafeteria, ice
cream shops, refreshments, eatery, canteen,
fast food, and coffee shops. However,
restaurants are sometimes risky to run, due
to the many sunk costs of setup, the low
margin of food preparation, high cost of
personnel, and risk of spoilage. This is
exactly the reason why sole proprietors who
manage these small businesses should have
financial literacy.
Eniola, and Entebang (2016), their study
showed the influence of financial literacy on
the performance of small and medium
enterprises (SMEs) in Nigeria as to how it
contributes to employment creation and
social progress. According to Telstra (2007)
in SME Trends and Achievements Report,
the role of SMEs has increased substantially
in real terms over the last decade in
producing international competitive
advantage. Governments all around the
world increasingly recognise the growing
role of SMEs as an important engine for net
job creation innovation, and productivity
(Organisation for Economic Cooperation
and Development 2010). The Asian
Development Bank suggests that on average
during 2007–2012 in Asia, SMEs accounted
for ninety-eight per cent of the business
population (Asian Development
Bank-Organisation for Economic
Cooperation and Development 2014).
1.2 SIGNIFICANCE OF THE STUDY
“What a restaurant cannot survive is failure
of financial management…” (Susskind and
Spies, 2011)
Whenever a movement in the success or
failure of the restaurant is triggered, initial
responses draw in to the quality of food, the
location of the business, the high fixed costs,
or even in the marketing perspective. But
what we sometimes fail to give importance
to is on the economic perspective. This
category includes economic reasons such as
decreased profits from diminished revenues;
depressed profits resulting from poor
controls; and voluntary and involuntary
bankruptcies, involving foreclosures,
takeover by creditors, receiverships, or
frozen assets for nonpayment of receipts.
(Parsa, et al 2005)
Running a restaurant is risky and there are
many factors at play. Some start-up
restaurants do not even last for six months.
Susskind and Spies iterated in their study the
underserving lack of attention given to the
financial side of the restaurants for the
success of the business. “We all know that
the most important thing about a
restaurant—the thing that stands out and
shapes a guest's experience—is the food.
Not only that, but we can name other
elements that are crucial to the guest's
restaurant experience, including staff,
service, location, ambience and decor, menu,
and overall execution. But restaurants can
survive weaknesses in all those areas and
still remain in business. We've all seen those
places. What a restaurant cannot survive is
failure of financial management, including
focusing on revenue, profit, expenses, debt,
and appropriate staffing levels.”
Financial literacy is indeed essential as
argued by Klapper, Lusardi and Panos
(2013). Their study revealed that individuals
with higher financial literacy are
significantly less likely to experience an
adverse income shock and have greater
unspent income leading to higher spending
capacity. Taft, Hosein, Mehrizi and Roshan
(2013) also claimed that “Higher financial
literacy leads to greater financial well-being
and less financial concerns. Finally, financial
wellbeing leads to less financial concern” (p.
63) Studies generally argue that financial
knowledge and capabilities can increase the
ability of individuals to make informed and
effective decisions (Lusardi 2012)
The SMEs inability, many times to live
beyond their first few months of existence
has been attributed partly to lack of finance
(Amoako, 2013). Also Sege (2010) said
small businesses fail because those who start
them have poor accounting record keeping
and does not bother to get money sorted out
before they start the business among others.
The absence of basic accounting practices in
most SMEs in the Philippines tends to
compound their financial challenges. Most
SMEs can’t access funds because banks and
other financiers cannot readily verify their
vibrancy and their access to quality projects
(Srinivas, 2005).
In a study of 148 respondents in Nigeria
(Enugu), Okoli (2011) links proper record
keeping and profitability of small scale
enterprises and assert that due to inadequate
5
record keeping, the small scale operators
could not assess their performances
effectively. He argues that in order to
enhance the profitability of small scale
enterprises and their continuity, there is need
for adequate record keeping which will help
the proprietors to keep track of the
performance of these enterprises.
Given there is a higher failure rate in the
first years of a business start-up (Wang
2008), financial literacy may be a key factor
in ensuring ongoing sustainability of the
firm. If a firm does not have the essential
financial resources, the probability of failure
in the earlier stages of operation may be
greater. Improving financial literacy, thus its
capability, is thought not only to enable the
business to make efficient decisions, but also
to contribute positively to businesses’
performance.
Financial literacy can be an essential
strategic resource for the efficient allocation
of finance and for greater financial stability.
Businesses with a good understanding of
financial literacy would be expected to be
better placed than firms without those skills.
Lack of financial knowledge and capabilities
can also result in circumstances that make
firms vulnerable to severe financial crises
(Mason & Wilson 2000), leading to a lower
rate of longer-term performance and higher
risk of cyclical volatility in the firm. Indeed,
financial knowledge and capabilities can
help the firms to cover unpredictable
eventualities and provide financial security.
This study will determine the level of
literacy of proprietors and how they used
this in operating their restaurants. This also
determines whether the financial knowledge
of small business owners contribute to the
growth of their food restaurants. In addition,
this we will also determine the demographic
profiles of these proprietors. Insights on the
result of the determination of the
relationship between financial literacy and
business growth will help the small business
owners in adjusting whether to improve their
financial literacy and discover some
financial concepts that they did not know of
that would help them generate valuable
decisions to contribute to the growth of their
business.
1.3 STATEMENT OF THE PROBLEM
The main objective of our study is to
determine the relationship between financial
literacy and business growth of micro
restaurants in Baguio City. It specifically
aims to know:
1. The demographic profile of the
proprietors of micro restaurants in
Baguio City in terms of:
o Gender
o Educational Attainment
o Age
o Years in Operation
2. The level of financial literacy of
sole proprietors in terms of:
o Budgeting
o Borrowing
o Investing
o Record Keeping
3. The level of growth of Micro
Restaurants in terms of:
o Annual Percentage increase
in profit
o Annual business profit
4. The significant relationship between
the financial literacy of proprietors
and the growth of their business?
1.4 CONCEPTUAL FRAMEWORK
INTERVENING VARIABLE
Demographic Factors:
 Age of Business Owners
 Gender
 Educational Attainment
 Years in Operation
INDEPENDENT VARIABLE
Financial literacy in terms of:
 Budgeting
 Borrowing
 Investing
 Record Keeping
DEPENDENT VARIABLE
Growth
 Annual Percentage Increase in
profit
EXPECTED OUTPUT
 To determine the significant
relationship between the
financial literacy of
proprietors and the growth of
their business.
1.5 Hypothesis
Gouws and Shuttleworth (2009:141) stated
that individuals’ decisions and subsequent
actions flow from their understanding of the
surroundings in which they operate. In order
to facilitate economic and financial
sustainability, individuals need the cognitive
ability to understand financial information.
This appears to be an argument for the value
of financial literacy as it pertains to business
growth and provides the premise for the
study to hypothesize that:
Hypothesis 1 (Ho): There is no significant
relationship between the financial literacy of
the owners of micro-restaurant and business
growth.
Hypothesis 2 (Ha): There is a significant
relationship between the financial literacy of
the owners of micro-restaurant and business
growth.
1.6 REVIEW OF RELATED
LITERATURE
Lee and Hsieh (2010, p.110) who believed
“that entrepreneurship is the cause for
discovering, driving new combinations of
production factors and create social
economy”. However, Troilo (2011, p.159)
viewed entrepreneurship as “a set of
activities that involve the discovery,
evaluation, and exploitation of opportunities
to introduce new goods and services, ways
of organizing markets, processes, and raw
materials through organizing efforts that
previously has not existed
This research sought to focus on
entrepreneurs as individuals, being owners
of micro-restaurants in Baguio City. The
owners of a restaurant will certainly want to
monitor their business’s financial condition.
Margins in the restaurant business are
extremely tight, so keeping a watchful eye
on your finances is critical. Hence, failure to
effectively and efficiently manage
restaurants due to inadequate financial
literacy of key people would not only harm
the individual businesses but could also
7
negatively transcend to the aggregate
economy. However, many new business
owners are daunted by the mere idea of
bookkeeping and accounting. But in reality,
both are pretty simple. Keep in mind that
bookkeeping and accounting share two basic
goals: to keep track of income and expenses,
which improves chances of making a profit,
and to collect the financial information
necessary for filing various tax returns.
(Williams, Haka, Bettner, and Carcello,
2008).
The term ‘financial literacy’ combines the
two words which separately mean a myriad
of issues but which can misplace their
relevance when used together. Literacy is
defined in the Oxford Dictionary of English
(Stevenson 2010) as ‘the ability to read and
write’. Collins Dictionary and Thesaurus
defines literacy as one’s ‘ability to use
language effectively’ (HarperCollins 2005).
There is no universally accepted definition
of financial literacy (Organisation for
Economic Cooperation and Development
2005). As conceptualised in the literature,
financial literacy means different things in
different contexts. The term financial
literacy varies according to one’s skills,
needs and experiences (Worthington 2006).
Remund (2010) summarized the four most
commonly used definitions of financial
literacy as budgeting, saving, borrowing,
and investing. The author concluded by
edging the researchers to use these concepts
as effective instruments for measuring
financial literacy of individuals. Financial
literacy helps in empowering and educating
investors so that they are knowledgeable
about finance in a way that is relevant to
their business and enables them to use this
knowledge to evaluate products and make
informed decisions (Remund, 2010).
However, Remund
(2010) believed that saving as a financial
literacy concept will be more applicable to
the general public and less to entrepreneurs
in the SMEs sector. Instead of saving money,
SMEs would rather invest it in their
enterprise growth strategies.
Financial literacy topics such as record
keeping, budgeting, personal finance and
savings were viewed to be more important to
lower-income individuals (Rhine and
Comeau, 2000).
In this study, the researchers opted for four
constructs to be adapted for this research,
namely, (1) Budgeting, (2) Borrowing, (3)
Investing, and (4) Record Keeping.
According to Atkinson and Messy (2012),
financial literacy is a combination of
awareness, knowledge, skill, attitude and
behavior necessary to make sound financial
decisions and ultimately achieve individual
financial wellbeing. For Lusimbo (2016),
financial literacy is simply the ability of an
individual to use knowledge and skills to
manage financial resources effectively.
Lusimbo further stated that a financially
literate MSE manager is likely to interact
with confidence with financial service
providers and make fewer management
mistakes than their illiterate counterparts
which ultimately results to MSE growth.
Njoroge (2012), in his study of the
relationship between financial literacy and
entrepreneurial success in Nairobi county
Kenya, he found out that financial literacy
exposes entrepreneurs to better
decision-making skills that lead to
borrowings, risk taking, diversifications, and
investments. He concluded that SMEs that
are more successful are run by entrepreneurs
who are financial literate and understand key
financial concepts that include, risk
management, interest rates, time value for
money and financial market
One of the barriers to developing a
standardized approach to financial literacy is
the use of other terms by researchers. It is
unclear whether the terms are used as
different concepts or synonyms. Many terms
used to describe financial literacy include
financial knowledge (Howlett et al. 2008),
financial capability (Holzmann 2010; Taylor
& Wagland 2011) and financial education
(Norman 2010). These terms have been
variably refined from a general definition
including an understanding of basic financial
concepts to a specific definition such as an
ability to manage personal finances.
Financial knowledge has been used as the
iteration of the financial literacy in previous
studies; for example, Kim (2001), Servon
and Kaestner (2008) and Courchane and
Zorn (2005). Although they are human
capital, the latter consists of both knowledge
and ability. The former is an integral
dimension of, but not equivalent to, financial
literacy (Hung et al. 2009; Huston 2010).
Whereas, financial literacy has an additional
application dimension in which individuals
should have the ability and confidence to use
their financial knowledge to make informed
decisions (Huston 2010). To the extent that
financial literacy involves application, rather
than just knowledge, this skill likely depends
on a person's ability to apply the knowledge
appropriately. Indeed, these two terms are
conceptually different. Therefore, using
financial knowledge and financial literacy
interchangeably may indicate potential
problems.
THE USE OF FINANCIAL LITERACY
CONCEPTS
To further our review on the definition and
determinants of financial literacy, various
authors have written explanations proving
the effectiveness of the four measures of
financial literacy listed above- budgeting,
borrowing, investing, and record keeping.
Majority of the questions have been
patterned from the study of Musie (2015)
and Sucuahi (2013)
BUDGETING
Rickards (2008) highlighted that SMEs
reviewed their strategic objectives at least
once a year. This is of vital importance for
end of the year financial reporting as key
institutions such as the South African
Revenue Services (SARS) also based their
tax year on a 12 months period. This study
established that most SMEs undertook their
budgets based on a 12 months cycle.
Furthermore, this study ascertained that
SMEs also prepared their budgets at the
beginning of each financial year and held
review sessions at least once a year.
Entrepreneurs used budgets as part of
performance management for their
employees. Pietrzak (2014) also argued in
favour of budgets being used as part of
organisation’s evaluation, motivation and
performance management. However, Cohen
& Karatzimas (2011) argued that there was a
limited use of budgets as part of performance
evaluation as the human resource
departments had limited involvement during
budgeting processes.
Warue et al. (2013) who wrote that budgets
reflected what management expected
regarding firm’s performance. Budgets
reflect how the enterprise is doing relative to
its objectives and overall strategy. The
literature revealed that budgets were aligned
with the objectives and the overall strategy of
the enterprises.
9
Østergren and Stensaker (2011) and Zeller
and Metzger (2013) highlighted that most
organizations were making use of budgeting
processes such as beyond budgeting, better
budgeting, rolling forecasts, and
activity-based budgeting, as a replacement of
the traditional budgeting in order to navigate
through the complex business environment
The following questions are then
formulated:
1. Mindfulness of restaurant owners/s
to develop business objectives to be
achieved in a year
2. Knowledge and mindfulness of the
business in preparing the budget
beginning of the financial year and
review at year end
3. Ability to budget from a basis for
the employee performance contracts
4. Ability to form a strong alignment
of the budget to the company
strategy
5. Knowledge in making use of
budgeting process such as
activity-based budgeting, beyond
budgeting, rolling budget instead of
traditional budgeting
BORROWING as a source of capital
Borrowed or debt capital is the capital
arranged from outside sources.
These sources of debt financing include the
following: financial institutions, commercial
banks or the general public in case of
debentures (eFinanceManagement.com).
This is the ability to obtain capital from
outside sources with minimal cost and
payoff obligation. Interestingly, Assibey
(2010) found out that most micro
entrepreneurs are illiterate with respect to
business financing. Without knowing that
their obligation is getting bigger because of
interest and high debts will lead to business
reversal (Worthington, 2004). Micro
entrepreneurs are highly literate in paying
their loan balance on time. They are aware
about the consequence in not paying the loan.
They knew that not paying on time will
result in paying penalties and other
surcharges.
However, micro entrepreneurs are not much
literate in separating the payment of their
business loans from personal loan using
their business money. Accounting principles
assert that business transaction should be
separated from the owner’s transaction and
this principle is fundamental and it applies to
all types of organization.
It was also noted that majority of the
business owners prefer to borrow short-term
loan from Indian national lender than to
borrow from financial institution such as
banks, lending companies and credit card
companies. This finding supports the
observation of Leiber (2010) that only 20
percent of the short-term credit for the small
businesses comes from the bank. In relation
with this, the result also shows that business
owners are not much concern on interest rate.
They are more concern about the approval of
the loan.
Hyz (2011, p. 163) wrote that “the main
sources of external capital for small and
medium-sized enterprises are the so-called
non-banking sources of financing (trade
credit, lease, factoring, franchising, loans
from the non-banking sector) and bank loans
(short and long-term)”. Hyz (2011) argued
that finance sourcing was based on the
firm’s development stage. The author further
argued that during the early growth stages
most enterprises rely on capital provided by
their owners or families members. It is only
during the further phases of development
where the enterprise can source finances
from its retained earnings. Only medium
sized firms may have easier access to bank
loans compared to smaller firms in the SME
sector (Hyz, 2011).
With the consideration of the above studies,
we formulated the following questions:
1. Mindfulness in separating the
payment of their business loans
from personal loan using their
business money.
2. Ability to split long term and short
debt in order to manage its balance
sheets
3. Consideration of cost of borrowing
i.e. interest rate before taking on a
loan
4. Restaurant is fully conversant with
the process to acquire funding from
different financial institution.
INVESTING
Although access to capital was still a major
challenge facing small businesses,
investment practices remained critically
important to SMEs. Prakash and Patawari
(2014) argued that SMEs investment in
fixed assets was vital in that it reduces
investors’ risk, lead to reduction in operating
expenses and promoted sustainable jobs in
the long run. The investment in the stock
markets is also influenced by financial
literacy level of the entrepreneurs
themselves. Van Rooij, Lusardi and Alessie
(2011) established that the individuals with
lower financial literacy level were unlikely
to invest in stock. This finding was
confirmed by Guiso and Viviano (2014) also
establishing that households’ participation in
the stock market increased considerably with
high levels of financial literacy.
The literature confirmed that SMEs did
make use of financial ratios when making
investment decision. However, due to
complexity of some these financial
evaluations, Hoe (2010) suggested that
MSMEs ought to employ the services of a
professional such as a financial manager
who will be able to assist the entrepreneurs
with such financial matters in order to create
more value for the firm. Thus, knowledge
and making use of financial ratios when
making investment decisions increased
considerably with high financial literacy.
Human capital development is another
critical area. Studies have found a positive
relationship between business’ capital
development and the business’ performance.
Chuluunbaatar et al (2011) further wrote that
appropriate investment and human capital
usage in the company had a positive impact
on performance, productivity, and
profitability of the firms.
The following questions are then
formulated:
1. Knowledge of restaurant in
investing its surplus cash in order to
generate more income in the future
2. Familiarity with financial measures
such as NPV, IRR, ROA before
committing to an investment
3. Ability to use third party to conduct
investment for the business.
4. Awareness of the criticality of
e-commerce infrastructure and
ability to invest in such e.g. internet
website
5. Awareness of the importance of
human capital and ability to invests
in human capital development e.g.
training of staff
RECORD KEEPING
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
profits.
While large firms can choose growth
strategies irrespective of their financial
status, small firms may have to use their
retained earnings to finance growth. This
may lead to the argument that the positive
relationship between profit and growth may
be stronger in the case of small firms. Indeed,
some studies that investigate small firms
(e.g., Cowling, 2004; Steffens et al., 2009)
report a positive effect of profit on growth.
Many previous studies, whose samples
include both small and large firms, report a
positive relationship.
Strielkowski (2012) suggested that only the
objective indicators of business success
should be adopted over the subjective
measures when measuring business success.
The business success must be equated to the
achievement of positive economic growth
indicators such as: profitability and growth
in number of employees (Strielkowski 2012).
In line with Strielkowski’s (2012) view of
business success, this research study made
use of objective measurement of business
success as represented by growth in terms of
both annual turnover and number of
employees.
DEMOGRAPHIC PROFILE: In the study
conducted by Mugure (2017) regarding the
Factors influencing the growth of
Hoe (2010) wrote that majority of the SMEs
were owner managed and most of the
owners did not have formal qualifications to
manage their businesses. The manner in
which they managed their business finances
was therefore, dependent on their education,
practical experience and any prior training.
This is a cause for concern as the
entrepreneurs held key positions in the firms
they have created (Ahmad, Halim & Zainal,
2010).
Also, Lusardi (2012) found out that age and
gender caused a difference in the level of
financial literacy. . Luksander, Béres,
Huzdik, and Németh (2014) also revealed
that in both theoretical and practical
financial knowledge, “males, older people,
those who pursue economic studies or who
are attending these kinds of courses at
university know more about financial
matters” (p. 220). Nonetheless, Fonseca,
Mullen, Zamarro, Zissimopoulos (2012)
tried to explain the gender gap in financial
literacy. These authors reasoned that women
tend to be less financially literate than men
because “men specialize in making
household financial decisions thereby
acquiring financial knowledge and women
specialize in other household functions”
(p.105). These authors further argued that
their results showed that the gender gap is
eliminated once women and men have
similar education and are carrying the same
number of responsibilities. These authors
were trying to argue that gender alone is not
a direct variable affecting financial literacy
but can be mediated or moderated by the
variables pertaining to level of education
and the roles they take in the financial
decision making. A recent study by Moon,
Ohk and Choi (2014) support the findings of
Lusardi (2012) that there exist distinct
gender differences whereby men are more
financial literate than women. Moon et al.
(2014) reasoned that Chinese female
students have fewer opportunities for
financial education and financial
transactions making them less financial
literate than men.
Financial literacy was found to decrease
with age. (Lusardi, 2010) it was also
13
mentioned that older adults tend to have
lower financial literacy and that younger
adults tend to have higher level of financial
literacy. Lusardi (2012) contended that older
adults (50 years old and above) and that
women, relative to men, tend to be less
financially literate as most of them would
answer “don’t know” when asked about
inflation, risk diversification and interest
rates. Researches (Lusardi & Mitchell, 2011,
Rooji et al., 2011; Fernero & Moticone,
2011; Klapper & PAnos, 2011) concluded
that the older generations were among the
highest with low levels of financial
literacy.In addition, Kehiaian and Williams
(2012) studied the financial literacy and
characteristics of Chapter 13 debtors. They
found a positive association between
financial literacy and financial education,
years of work experience and level of
personal income.
A number of other studies (Samkin et al.,
2014; Traft et al., 2013; Lusardi and
Mitchell 2011; Fernero and Moticone, 2011;
Houston, 2012) established that educational
levels were positively correlated with high
financial literacy level compared to those
with lower educational level. Hoe (2010)
wrote that majority of SMEs were managed
and most of the owners did not have formal
qualifications to manage their businesses.
The manner, in which they manage finances,
depends on their education, practical
experience and any prior training. Sena,
Scott and Roper (2012) demonstrated that
there was a noticeable different between
women entrepreneurs with formal education
qualification and those who did not have
formal education when it comes to sourcing
external funding to start a business.
Nofsinger and Wang (2011) explained that
experience had a positive impact on how
many external funds were granted to the
firm.
In the study of Akben-Selcuk and
Altiok-Yilmaz (2014), their results showed
that formal finance education in college was
significantly associated with higher financial
literacy scores. Literatures suggest that
lower level of financial literacy is associated
with lower level of education (Almenberg
and Säve-Söderbergh , 2011;
Bucher-Koenen and Lusardi , 2011; Lusardi
and Mitchell, 2011). In the Philippine
context, Sucuahi (2013) found out that
educational attainment showed a positive
and significant influence on financial
literacy yet gender cannot predict the
financial literacy level among micro
entrepreneurs in Davao City. Guliman
(2015), in his evaluation of the financial
literacy of MSME owners in Iligan, he was
able to find a positive and significant
relationship between college education and
financial knowledge while years in operation
posed a negative relationship to financial
skills. Also, a college degree relative to
being a high school graduate increases the
likelihood of having a higher level of
financial literacy.
On one hand, results of the study of
Monticone (2010) indicated that “wealth has
a positive but small effect on the degree of
financial knowledge” (p. 403). Bhushan and
Medury (2013) also found out that financial
literacy level is not only affected by gender
and education but also associated to income,
nature of employment and place of work.
Nonetheless, Bhushan and Medury (2013)
found out that financial literacy is not related
to age and geographic region. Previous
research suggested that the level of available
resources has an impact on financial
behavior, as consumers with less available
resources may fail to meet all of their
financial obligations, or lack the means to
save (Aizcorbe, Kennickell, & Moore, 2003;
Hilgert et al., 2003).
Kehiaian and Williams (2012) studied the
financial literacy and characteristics of
Chapter 13 debtors. They found a positive
association between financial literacy and
financial education, years of work
experience and level of personal income.
Lantara and Kartini (2015) in their study, it
was found that male students, students with
economics and business majors, those with a
higher income, and longer working
experience had a higher financial literacy
rate. Beal and Delpachitra (2003) surveyed
first year students in their first semester of
studies at the University of Southern
Queensland (USQ). The findings suggested
that business students tended to have a better
literacy rate than other students taking
non-business disciplines. They also found
that financial literacy had a positive
relationship with income and working
experience.Lower levels of financial literacy
are found among subgroups. They include
those who are non-business majors, in the
lower class ranks, women, under age 30, and
have little work experience. (Chen and
Volpe,1998) it was suggested in their paper
that participants with less work experience
have high probability of being less
financially knowledgeable than those with
more experience.
15
 CHAPTER TWO: METHODOLOGY
2.1 RESEARCH DESIGN
Research Design is the specification of
techniques and processes for obtaining the
information required. It is the over-all
operational pattern or framework of the
project which states what data is to be
gathered from which source by what
processes. (Green and Tull, 1974)
This study adopted the descriptive and
historical method of research. According to
Burns and Grove (2003:201), descriptive
research is designed to provide a picture of a
situation as it naturally happens. It may be
used to justify current practice and make
judgment and to develop theories. It helps
researchers plan and carry out descriptive
studies, designed to provide rich descriptive
details about people, places, and other
phenomenon. (Hall, 2011). For this study,
descriptive research was used to determine
the awareness and level of knowledge of
small restaurants sole proprietors in Baguio
City about financial accounting and
management. Historical Method involves
investigating, recording, analyzing and
interpreting the events of the past for
discovering generalization that are helpful in
understanding the past, understanding the
present, and to a limited extent, in
anticipating the future. (Best: 1977, p.15).
Data were collected using the quantitative
data collection method. Quantitative
research method is adopted because it allows
the researcher to get the facts and not
abstract about the aim of dissertation
(Bryman and Bell, 2007). According to
Matthews & Ross (2010) quantitative
research methods are basically applied to the
collection of data that is structured and
which could be represented numerically.
Quantitative methods emphasize objective
measurements and the statistical,
mathematical analysis of data collected
through polls, questionnaires, and surveys.
( Muijs, 2004). Thus, survey and
questionnaire methods are used for this
research as the best way to measure attitudes
and to describe behavioral patterns.
(Saunders, Lewis and Thornhill, 2003).
2.2 DATA GATHERING INSTRUMENT
The collection of data represents a
pre-requisite for carrying out a research and
can be derived from a number of sources.
These sources are classified into secondary
and primary data (Clarke and Dawson,
1999). Neil (1985) pointed out that
secondary data is material that has been
gathered previously and primary data
consists of new material collected by the
researcher for the purpose at hand by the use
of questionnaires, interview schedules,
observation, participation etc.
The primary source of data is the field
survey conducted by the author by means of
a questionnaire. A questionnaire is a research
instrument consisting of a series of questions
for the purpose of gathering information
from respondents. Questionnaires can be
thought of as a kind of written interview.
(McLeod, 2018) This study uses a
questionnaire with multiple choice questions
designed to gauge financial knowledge.
2.3 DATA GATHERING PROCEDURE
The study’s target respondents are the
owners of micro-restaurants in Baguio City,
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
9 4.50 – 5.00
8 3.50 - 4.00
7 3.00 - 3.50
6 2.50 - 3.00
2.1 POPULATION AND SAMPLE
The researchers used the simple random
sampling technique in obtaining the
sample size of the respondents. Simple
random sampling is a sampling
technique where every item in the
population has an even chance and
likelihood of being selected in the
sample. The population of the study
consisted of one group: the owners.
The total population of the study is 364
owners of micro-restaurants in Baguio
City. The population was taken from the
mayor’s office of Baguio City.
To determine the sample size used in the
study, the Yamane’s formula with a 6%
margin of error was used;
n= N/ (1+Ne2)
Where: n= sample size
N= population size
e= margin of error
The computation of the sample size is as
follows:
Extent to which the respondents rated
their level of financial literacy. Below is
the formula used:
∑ 𝑓𝑥
𝜇=
𝑛 investing, and record keeping. Each
Where: µ= weighted mean
Σ = summation
f = frequency
x = weight assigned to scale
n = number of respondents
5 2.00 - 2.50
4 1.50 - 2.00
3 1.00 - 1.50
2 0.50 - 1.00
1 Below 500,000
n=N/(1+Ne2)
=374/ (1+ (364 *.062)
n=159.39 or 160
The sample size of 160 owners was used
by the researchers.
2.2 TREATMENT OF THE DATA
Primary data is a data observed or
collected directly from first-hand
experience. Published data and the data
collected in the past or other parties are
called secondary data.
(Businessdictionary.com, n.d.)
The data collected as responses to the
questionnaires were tallied and presented
in tables. The mean of the literacy is
computed using the weighted mean
(Likert scale).
The researchers also utilized the
descriptive statistics in order to measure
the weighted mean and determine the
There are 4 different financial literacy
concepts used in measuring level of
financial literacy: budgeting, borrowing,
value was measured on a five-point
Likert-type scale. This was used in
categorizing the gathered data
specifically to rank the extent of the
variables.
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
of their age. The results show that 18-32y/o
owners have the highest financial literacy and
highest growth depicted by the percentage
growth of 53% followed by other ages,
consequently. Second highest growth are owners
aging 60 and above with a percentage of 52%
followed by those who are 47-60 yrs. old and
lastly those 33-46 yrs. Old with percentages of
47% and 37%. On the other hand, the trend of
financial literacy starts the highest as with the
youngest and decreases as the age increases.
BUDGETING: Financial literacy levels in
budgeting of 18-32y/o has the highest weighted
mean advantage having 3.72 WM. Differences
in WM amounts ranges from 0.01 to 0.62 with
60y/o and above coming last having 3.10 WM.
BORROWING: Financial literacy level in
borrowing of 18-32y/o has the highest weighted
mean advantage having 3.45 WM. Differences
in WM amounts ranges from 0.38 to 1.83 with
60y/o and above coming last having 1.62 WM.
INVESTING: Financial literacy levels in
investing of 18-32y/o has the highest weighted
mean advantage having 3.63 WM. Differences
in WM amounts ranges from 0.75 to 0.88 with
60y/o and above coming last having 2.75 WM.
RECORD KEEPING: Financial literacy level of
18-32y/o has the highest weighted mean
advantage having 4.07 WM. Differences in WM
amounts ranges from 0.01 to 0.62 with 60y/o
and above coming last having 3.50 WM.
Total average shows that 18-32y/o owners (3.72
WM) have the only “High Literacy” among all,
followed by33-46y/o (3.38WM) with “Moderate
Literacy”, then 47-60y/o (3.22WM) also with
“Moderate Literacy”, and lastly, 60y/o and
above (2.74WM) with “Moderate Literacy”.
The results support the study that financial
literacy was found to decrease with age and that
older adults tend to have lower financial literacy
and that younger adults tend to have higher level
of financial literacy. (Lusardi, 2010)

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
male and female in terms of their financial
literacy and its impact to the growth of their
business. The total average shows that male
owners have a higher literacy (“High
Literacy”)with a mean of 3.47 than the female
owners who have a (“Moderate Literacy”) with
mean score of 3.38. The result corresponds that
restaurants of males have higher growth than
females.
BUDGETING: Female and male financial
literacy level on budgeting is on the same level
both bearing a “High Literacy” with male
owners having .08 weighted mean greater.
BORROWING: Female and male financial
literacy level on borrowing are still on the same
level both bearing a “Moderate Literacy” with
female owners having .04 weighted mean
greater.
INVESTING: Female and male financial
literacy level on investing are still on the same
level both bearing a “Moderate Literacy” with
male owners having .18 weighted mean greater.
RECORD KEEPING: Female and male
financial literacy level on Record keeping are
still on the same level both bearing a “High
Literacy” with male owners having .14 weighted
mean greater.
The total average differs with male owners
having .09 weighted mean greater. Female
owners have a “Moderate Literacy” while male
owners have “High Literacy” according to this
measure.
This result supports the study that women tend
to be less financially literate than men because
“men specialize in making household financial
decisions thereby acquiring financial knowledge
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
and financial literacy of sole proprietors
according to their educational attainment of
owners. The results show that Post Graduate
owners (“High Literacy”) have a higher literacy
than College Graduates (“High literacy”) by a
small decimal amount, and High School
Graduates by a relatively high decimal amount.
However, basing on the growth of their
businesses, college graduates have higher
growth compared to the others with a growth
percentage of 48%.
BUDGETING: Financial Literacy level in
budgeting of College Graduates have the highest
advantage coming before Post Graduates (0.10
WM lesser), and before High School Graduates
(0.46 WM lesser).
BORROWING: Financial Literacy level in
borrowing of Post Graduates have the highest
advantage coming before College Graduates
(0.25 WM lesser), and before High School
Graduate (0.70 WM lesser)
INVESTING: Financial Literacy level in
investing of Post Graduates have the highest
advantage coming before College Graduates
(0.17 WM lesser), and before High School
Graduate (0.44 WM lesser)
RECORD KEEPING: Financial Literacy level in
record keeping of both Post Graduates and
College Graduates gets the highest WM and then
followed by High School Graduates (0.41 WM
lesser)
The total average shows that Post Graduates
have the highest weighted mean (3.62WM) with
“HIGH LITERACY”, followed by College
Graduates (3.54WM), and then High School
Graduates (3.10WM) with “MODERATE
LITERACY”. This result supports the study that
educational levels were positively correlated
with high financial literacy level compared to
those with lower educational level. (Samkin et
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
annual percentage increase in profits of the
micro-restaurants of respondents. It resulted
to an average percentage increase in profits
of 44.96 without considering the intervening
variables. Owners aged 18-32 showed the
highest Annual percentage increase in profit
of 53.04 among other age ranges, male
owners showed the higher increase in profit
of 49.38%, College graduates showed the
highest with 48.34% increase, and 10 years
and above in operation with a 62.93%
increase.

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