← Financial Management for SMEs: Financial Literacy for SMEs

Introduction to Financial Management

Module 02 / 6 · 60 min

Understand how money flows through a small business, the difference between revenue, costs, expenses and profit, why cash is not profit, and what owners are responsible for.

In this module you will learn to

Describe the financial management cycle of plan, record, control and review
Trace operating, investing and financing money flows in a small business
Calculate a simple profit estimate and a break-even level of sales
Explain why a cash balance differs from profit and list the owners' financial responsibilities

Built on

Erudite Africa training curriculum: Financial Management for SMEs, Level 1 Beginner, Financial Literacy for SMEs (October 2026)
Commercial Code Proclamation No. 1243/2021; Commercial Registration and Business Licensing Proclamation No. 980/2016 as amended by No. 1150/2019, and Regulation No. 392/2016 as amended by No. 461/2020
Income Tax Proclamation No. 979/2016 as amended by No. 1395/2025; Federal Tax Administration Proclamation No. 983/2016 as amended by No. 1434/2026
VAT Proclamation No. 1341/2024; VAT Registration Directive No. 1104/2025; Electronic Invoicing System Administration Directive No. 1142/2026; Council of Ministers Regulation No. 139/2007 on sales register machines
Financial Reporting Proclamation No. 847/2014; Private Organization Employees' Pension Proclamation No. 1268/2022
Investopia's verified Ethiopian tax and business law fact sheet (October 2026), based on the laws above and summaries by PwC, KPMG, EY, Grant Thornton, the IFRS Foundation and Ethiopian law firms

Examples and companies are fictional. Tax rates and rules are shown as they stood when the course was written; always check the current proclamations, directives and guidance from the Ministry of Revenues before filing, and take professional advice for your own case.