Author(s): Nto Philips O. O, Nto Chioma P. O, Philips Chikaodinaka. B

Abstract:
The study was conducted to discriminate between Internal and External financial options among small and medium scale enterprises in Abia State of Nigeria. The specific objective of the study is to identify factors that distinguish among Internal and external financial options among the enterprises. Data for the study were collected with the use of questionnaires administered on 100 SMEs that were randomly selected across Ohafia, Umuahia and Aba geographical zones of the State. The data were analysed discriminant function model. The result of the discriminant function model reveals that firm size and value of movable asset contributed 75.83% and 10.10% respectively to the total product variable contribution of the discriminant Canonical score of the model. This implies that firm size is the highest factors that discriminate among internal and external financial options of SMEs. The group centroids were 1.51 and -1.09 for groups 1 and 2 respectively. It is recommended that SMEs intending to source external financial option, to adopt measures that will increase the firm size and value of movable assets. Such measures include forming financial cooperative societies through pooling of resources together. It is also recommended that SMEs should integrate vertically or horizontally so as to expand firm size.