Abstract

The purpose of this study is to identify the financial factors that enhance the financial competitiveness of small and medium enterprises (SMEs) in Gujarat, India. The principal component analysis has been applied to extract the financial factors from financial performance ratios of a sample size of 38 stock exchange SMEs, based in Gujarat, India. The ranking has been given to the SMEs based upon their factor score and comprehensive score. The results show that profitability, management efficiency, liquidity and leverage factors are the major factors affecting the financial competitiveness of SMEs. The study covers only one state of the country, and the findings from different states may differ and need to get verified. Despite the highest contribution of SMEs in the GDP of India, there exist very few Indian studies on SME competitiveness. This study contributes to filling this gap.

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