The Influence of Inventory Management Practices on Financial Performance among Retail Businesses

Abstract

Aims: This study aimed to investigate the influence of inventory management practices on the financial performance of retail businesses in Cateel, Davao Oriental during the year 2024. Specifically, the study examined the levels of inventory management in terms of business order inventory, inventory storage, inventory control, and warehouse inventory management, as well as the levels of financial performance in terms of sales growth, market growth, and profit growth. Study Design: Descriptive-correlational research design. Place and Duration of Study: Cateel, Davao Oriental during the year 2024. Methodology: Consist of 116 retail businesses operating for at least one year. Results: The respondents demonstrated high levels of inventory management (x̄ = 4.12, s = 0.50), particularly in inventory storage (x̄ = 4.37, s = 0.81) and inventory control (x̄ = 4.26, s = 0.55). Financial performance also reflected favorable outcomes, with profit growth showing the highest mean (x̄ = 4.02 s = 0.65). A moderate positive relationship (r = 0.648, p = 0.000) was observed between overall inventory management and overall financial performance. Furthermore, regression analysis indicated that business order inventory (β = 0.463, p = 0.000), inventory control (β = 0.452, p = 0.002), and warehouse inventory management (β= 0.163, p = 0.018) significantly influenced financial performance (β = -0.031, p = 0.738). In contrast, inventory storage did not show a significant impact. Conclusion: Findings suggest that targeted improvements in specific inventory domains may enhance business performance. Recommendations include prioritizing training and support for inventory control systems and reinforcing structured order and management practices for sustainable financial outcomes.