An Assessment of Inventory Management Practices and Their Influence on the Business Performance of Small Retail Enterprises

Jomar Valonda Villena; Emmanuel M Serna; Jerome L Dizon; Francis Allan Bernales

doi:10.36948/ijfmr.2026.v08i03.80244

An Assessment of Inventory Management Practices and Their Influence on the Business Performance of Small Retail Enterprises

Author(s)	Dr. Jomar Valonda Villena, Atty. Emmanuel M Serna, Dr. Jerome L Dizon, Mr. Francis Allan Bernales
Country	Philippines
Abstract	This study was conducted to determine the inventory management practices and evaluate the business performance of small retail enterprises located in Baliwag, Bulacan. Specifically, this study focuses on assessing the inventory management practices of the respondents in terms of ordering, receiving, storing, warehousing, recording, and dispatching. In addition, this study also measures the business performance of the respondents based on their profitability ratios and liquidity ratios. This study used the descriptive method of research (quantitative) using the twenty-seven (27) small retail enterprises situated in Baliwag, Bulacan, as the target respondents. Specifically, these small retail enterprises are engaged in selling RTW. The researcher coordinated with the Municipality of Baliwag – Business Processing and Licensing Office (BPLO) to identify the small retail enterprises engaged in RTW. The target respondents must be operating for at least two years and registered in the Department of Trade and Industry and Bureau of Internal Revenue. The questionnaire used in gathering the data consists of statement items related to inventory management practices in order, receiving, storing, warehousing, recording, and dispatching. Moreover, to determine the respondents' business performance, the researcher sought permission from the owners of small retail enterprises to access their financial statements to assess profitability and liquidity ratios. Based on the analysis of data, it showed that the inventory management practices and business performance in terms of profitability, liquidity and activity ratios are not statistically significant, however, the relationship of the two variables can be directly or indirectly proportional to each other. Findings revealed the Small Retail Enterprises in Baliwag, Bulacan moderately practiced the inventory management practices such as Ordering, Receiving, Storing, and Warehousing while recording and dispatching process is slightly practiced. Based on the data presented they are simply relying on common sense to determine the quantity of inventory to order. It also revealed that using an equation to determine the quantity to be ordered and implementing real-time inventory system are not practiced at all. Furthermore, it was concluded that majority of the respondents affirm that amidst global pandemic they can generally earn profit after settling all the expenses evidenced by profitability ratios. However, two of them experienced a net loss that could be an indication that there is a room for improvement and betterment in terms of assessing the operational expenses. Moreover, the all respondents can generally meet their short-terms obligations and majority of them can stay in the business operations for a period of 8 months or more using their defensive assets verified by the computed liquidity ratios. Lastly, the respondent’s activity ratios (inventory turnover and age of inventory) show longer period to sell their inventory. If the inventory turnover ratio is low, it can mean that there could be a decline in the popularity of the products or weak sales performance. Thus, the higher the inventory turnover, the better, since high inventory turnover typically means a company is selling goods quickly. Lastly, it can be concluded that the inventory management practices of small retail enterprises evaluated against inventory control procedures and activities is moderately complied and some areas are low in terms of segregation of duties, annual inventory count, recording of business transactions in the general ledger, failure to submit of the BIR Inventory list every year which entails penalty in accordance with RMC No.57-2017 Annex A. Overall, the study concluded that inventory management practices are moderately applied which will be a tool in improving the business operations which will help a higher/better standing of financial ratios of Small Retail Enterprises in Baliwag, Bulacan.
Keywords	Inventory Management Practices; Small Retail Enterprises; Business Performance; Profitability Ratios; Liquidity Ratios; Activity Ratios
Field	Business Administration
Published In	Volume 8, Issue 3, May-June 2026
Published On	2026-06-02
DOI	https://doi.org/10.36948/ijfmr.2026.v08i03.80244

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An Assessment of Inventory Management Practices and Their Influence on the Business Performance of Small Retail Enterprises

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