TABLE OF CONTENTS
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF THE PROBLEM
1.3 RESEARCH QUESTION
1.4
OBJECTIVE OF THE STUDY
1.5
RESEARCH HYPOTHESIS
1.6
SIGNIFICANCE OF THE STUDY
1.7
SCOPE OF THE STUDY
1.8 DEFINITION OF TERM
CHAPTER
TWO
2.0 LITERATURE REVIEW
2.1 CONCEPT OF WORKING CAPITAL
MANAGEMENT
2.1.1 WORKING CAPITAL CYCLE
2.1.2
DETERMINATION
OF WORKING CAPITAL
2.1.3
CASH
MANAGEMENT
2.2 THEORETICAL FRAME WORK
2.3 EMPIRICAL REVIEW
CHAPTER THREE
3.1 RESEARCH DESIGN
3.2 POPULATION OF THE STUDY
3.3 METHOD OF DATA COLLECTION
3.4 SAMPLING SIZE AND SAMPLING
TECHNIQUE
3.5 SOURCE OF DATA
3.6
METHOD OF DATA ANALYSIS
CHAPTER FOUR
4.1
PRESENTATION AND ANALYSIS
4.1.
1 PRESENTATION OF DATA AND ANALYSIS
4.2
TESTING OF HYPOTHESIS
4.3 DISCUSSION OF FINDINGS
CHAPTER
FIVE
5.0 SUMMARY, CONCLUSION AND
RECOMMENDATION
5.1 SUMMARY
5.2 CONCLUSION
5.3 RECOMMENDATIONS
REFERENCES
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
It
is surprising that most of the companies go bankrupt and collapse not because
they are not profitable but because their inability to meet their mature
obligations. This is usually due to the inefficient management of their working
capital, particularly in manufacturing companies. Therefore, the survival of a
company depends largely on the availability of adequate working capital as well
as the proper management of each of its component to have optimality.
Working
Capital management involves the relationship between a firms short term assets
and its short term liabilities. The basic goal of the working capital is to
ensure that a firm is able to continue its operation and has sufficient ability
to satisfy both maturing short term debts and upcoming operational expenses.
This is done so as to avoid two ugly situations of our capitalization and under
capitalization.
Over
capitalization according to olowe (2007) is an inefficient working capital
management that results in excessive stocks, debtors and cash with very few
creditors. The implication of this is that, it impairs te firm’s profitability
as idle investment earns nothing. The idle investment could have been invested
in other profitable investment like marketable securities.
Under
capitalization on the other hand occurs if a firm is trying to support large
volume of production with little long term capital at its disposal.
The
implication is that it can threaten the solvency of a firm because of its
inability to meet its current and manufacturing obligation.
Thus
the ultimate aim of management of working capital is to maintain an optimum
level of working . in maintaining an optimum level of working capital the
company must avoid our capitalization and under capitalization.
1.2 STATEMENT OF THE PROBLEM
The
survival of a business firm or company depends largely on its ability to
properly manage its working capital components. The prevailing issue of
management of resources in the country particularly the manufacturing companies
has made it to be paramount importance to look into the management of working
capital in this sector.
An
efficient working capital management lead to over trading or under trading. The
result of these two unfavorable condition lead to insolvency or lower return on
capital employed. It adversely affects the profitability and liquidity of a
company. This study intend to address the problem of inefficiency in the
management of working capital in manufacturing companies by solving the
problem, the manufacturing company in particular should be able to manage the
components of its working capital in order to maintain an optimum level of
working capital.
1.3 RESEARCH QUESTION
This
study provided answers to the following research questions
1.
How effective does the working capital
management of LUBCON Nigeria LTD enhances its profitability?
2.
Has LUBCON Nigeria ltd been able to
manage its trade debtors, stock and trade creditors efficiency?
1.4 OBJECTIVE
OF THE STUDY
The main objective of
the study is to examine the effect of working capital management on liquidity,
profitability and overall management of the manufacturing companies
Sequences
to this, the following are specific objective of the study
2.
To assess the impact of working capital
on the liquidity and profitability as well overall management of the company
3.
To examine the optimal level of working
capital, which the company should maintain in order to avoid over trading and
under trading.
1.5
RESEARCH HYPOTHESIS
In order to achieve the stated
objectives and to solve the problem earlier highlighted, the following
hypothesis stated below would be tested empirically.
HYPOTHESIS 1
HO:
Efficient management of the working capital does not enhance liquidity and
profitability of the business
HYPOTHESIS 2
HO:
Efficient working capital management enhances overall performance of the
company.
1.6
SIGNIFICANCE OF THE STUDY
The
preparation of working capital cycle serves the following purpose
1.
It gives insight into the amount of cash
investment required to finance working capital cycle, the higher the cash
investment required and vice-versa
2.
It serves as an improvement in working
capital ratio for control purpose.
3.
The comparison of a company’s present
working capital companies in the same
industry may reveal area where liquidity can be improved upon
1.7
SCOPE OF THE STUDY
The scope of the study covered the
management of the working capital in manufacturing companies of LUBCON Nigeria
limited in particular. It takes care of the management of working capital and
its impact the liquidity, profitability as well as the overall management of
LUBCON Nigeria limited. The case study is needed in order to keep us written
the management of LUBCON Nig limited.
1.8 DEFINITION OF TERM
This Is the
Definition of Some Key Term that are basically used in the cause of discussion
on the study
A. LIQUIDITY: it is the amount of cash asset that a company
has or can obtain to transact business with or finance it operation
B. CURRENT
ASSETS: these are asset which can be
converted into cash within and accounting period usually a year.
C. CURRENT
LIABILITIES: There are liabilities which fall due within a year. These include
trade creditor banks overdraft and accrued expenses.
D. OVER
TRADING: this term is use to describe a situation where an organization operate
than what its resource can cope with.
E. UNDER
TRADING: This is an inefficient working capital management that results in
excessive stocks, debtors, cash.
Login To Comment