ASSESSMENT OF THE IMPACT OF FUNGIBILITY AND CASH MANAGEMENT IN ENSURING PRODUCTIVITY IN BREWING INDUSTRY (A STUDY OF CHAMPION BREWERIES PLC)

ABSTRACT

This study was conducted to examine the impacts of fungibility and cash management in ensuring productivity in brewing industry. Relevant literature review was carried out in the course of conducting the study and gave it the required theoretical background of which the study the problem associated with the impact of fungibility and cash management in ensuring productivity in brewing industry were reviewed. Questionnaire was employed as the major instrument for data collection and the data were analyzed using simple percentages. On the bases of the data of the data analyzes carried in the study and the testing of research question, the research recorded some useful findings. One of the important findings recorded in the research work was the impact of fungibility and cash management. Contribute the significantly to the attainment of the brewing industry. These contributions include the following to the promotion of good productivity in the brewing industry and it enables the organization to ensure the industry peace and also lead the organization objectives. The establishment of we laid down grievance and other procedures of setting dispute are another contribution of the fungibility and cash management. Based on the findings recorded in the study some useful recommendations were made. Recruitment policy which ensures that people are engaged in the jobs. Which they best suited, should be put in place by the management of Champion Breweries Plc Uyo. The organization should establish free flow of information between employers and employees.  

TABLE OF CONTENTS

Contents                                                                                  Pages

Cover page --      -        --      -        -        -        -        -        -        i

Title page   -        -        -        -        -        -        -        -        -        ii

Certification        -        -        -        -        -        -        -        -        -        iii

Dedication  --      --      -        -        -        -        -        -        -        iv

Acknowledgements      -        -        -        -        -        -        -        -        v

Abstract     -        -        -        -        -        -        -        -        -        -        vii

Table of content  -        -        -        -        -        -        -        -        viii

CHAPTER ONE - INTRODUCTION

1.1    Background of the study        -        -        --      -        -        -        1

1.2    Statement of the problem     -        -        -        -        -        3

1.3    Objectives of the study -        -        -        -        -        -        5

1.4    Research Questions      -        -        -        -        -        -        -        6

1.5    Significance of the study        -        -        -        -        -        -        7

1.6    Scope of the study        -        -        -        -        -        -        -        8

1.7    Limitation of the study  -        -        -        -        -        -        9

1.8    Definitions of terms and acronyms -        -        -        -        10

CHAPTER TWO - REVIEW OF RELATED LITERATURE

2.1 Definition of Fungibility    -        -        -        -        -        -        13

2.2 Fungibility Ratio for Performance Measurement   -        -        15

2.3      Constraint and Impact on Fungibility       -        -        -        16

2.4      Theoretical Framework -        -        -        -        -        -        19

2.5 Definition and Meaning of Productivity        -        -        -        25

2.6 Productivity Ratio for Performance Measurement -        27

2.7    Construction and Impact on Productivity Optimization        29

2.8 Cash Management  -        -        -        -        -        -        -        32

CHAPTER THREE - RESEARCH METHODOLOGY

3.1    Introduction        -        -        -        -        -        -        -        -        38

3.2    Research Design         -        -        -        -        -        -        -        38

3.3    Area of the Study -        -        -        -        -        -        -        39

3.4    Population -        -        -        -        -        -        -        -        39

3.5    Source of Data Collection      -        -        -        -        -        40

3.6    Method of Data Collection      -        -        -        -        -        40

3.7 Method of Data Analysis -        -        -        -        -        -        41

CHAPTER FOUR - DATA PRESENTATION AND ANALYSIS

4.0    Introduction        -        -        -        -        -        -        -        -        42

4.1 Questionnaire Distribution        -        -        -        -        -        -        42

4.2    Data Presentation and Analysis of the Reponses of the Various Department        -        -        -        -        --      -        -        43

4.3 Research   Hypothesis     -        -        -        -        -        -        47

4.4    Summary of   Findings          -        -        -        -        -        -        48

CHAPTER FIVE - SUMMARY, CONCLUSION, RECOMMENDATION

5.1    Introduction        -        -        -        -        -        -        -        -        50

5.2    Summary   -        -        -        -        -        -        -        -        -        50

5.3    Conclusion  -        -        -        -        -        -        -        -        51

5.4    Recommendation         -        -        -        -        -        -        -        52

References

Appendices

CHAPTER ONE

1.1   INTRODUCTION

The success of any business today is largely determined by the fungibility position and the way in which it manage its cash to ensure productivity. Solomon (2002) as the main purpose of establishing business is to make profit and not only to make profit but to optimize it therefore all necessary factors responsible for  such should be controlled and manage in order to achieve the objective (2001).

Fungibility position of breweries could be considered in terms of cash and cash equivalent; loans advance prepayment, debtors, creditors etc, which could be readily ascertained to meet up with the financial obligation of breweriess in short term and long term (2003).

Abonede (2004) idie cash which some could refers to as surplus reserves and which could be also seen as part of the fungibility of a company could be used in such a way that it will make profit to accrue to it, therefore adequate care should be taken in the aspect of managing cash Lucey (2003). There is a cost involved in maintaining a balanced fungibility position. This is especially so where the interest rate is low and credit demand is sluggish however, those cost can be minimized through the use of spread management when interest rate and credit demand are increasing a balance fungibility can be very profitable because fungibility is available to meet the loan demand maintaining a balance productivity. Joseph (1971).

John (1998) argue that by management his fungibility position a breweries may be able to afford the cost that often accompany an excess as well as deficit fungibility position. In addition it can display to regulatory as well as investors a logical controlled method of ensuring that the need of the community and the asset of the shareholders are being well managed. It can be reasonably inference quoted above that there exist on important relationship between the concept of fungibility and productivity.

Efficiency in breweriess in terms of fungibility and productivity could be measure through trend analysis and ratio analysis. Some of the ratio includes capitals adequacy asset utilization productivity, fungibility, and cash flow ratio.

A proper consideration and analysis of this will give us a base for determining the best position for fungibility and cash management to ensure productivity in brewing industry. Aborede (2004).

1.2   STATEMENT OF THE PROBLEM

Through these financial roles, the commercial breweriess use the idle funds in other classes of financial assets investment. These business activities of the breweries is not done without problem facing it, since these deposit which have been invested by the breweriess for profit maximization can be demanded for at any time. When the breweries is not able to meet their financial obligations, the public begins to loss confidence and these will cause a lot of competition to the financial sector. With the high increase of competition in the brewing industry, every commercial breweries should strive to operate on profit and at the same time meet the financial demand of its depositors by maintaining adequate fungibility. The problem then becomes how to select the optimum point at which commercial breweries can maintain its assets in order to optimize these two objectives. These problems become more difficult as a large numbers of breweriess are basically engaged with profit maximization and tend to neglect the importance of fungibility management and these can lead to technical and legal insolvency.

This research work will also see to other problems such as the impact of excess fungibility and the problem of estimating the population of the deposits that can be demanded for at any specific time, selection of factors that will affect or influence the breweries fungibility level and finally problem of satisfying the two major publics of the commercial breweries simultaneously. With these solutions will be prescribe and recommendations will be made where necessary.

 1.3   OBJECTIVE OF THE STUDY

The competition environment of the financial institutions is to tense that any commercial breweries that aims to survive must be aware of the challenges of its fungibility and productivity obligation as both variable can make or destroy its future.

This study is largely centered on fungibility objective and ensure its ability to meet up the depositors demand thereby maximizing its value and there is also uncertainties in the asset management of the commercial breweriess as the new deposit does not correspond with the customer’s withdrawals, since demand is made at short notice. Therefore this study is aimed at the following goals.

v  To know fungibility management will handle these uncertainties and determine their impact on productivity.

v  Discovering the specific factors that are useful in improving productivity and fungibility position of the commercial breweriess.

v  To examine the cost of fungibility and ilfungibility levels at the performance of commercial breweriess and length at which this fungibility can be used as competitive instruments.

v  To take a critical view of the adopted fungibility measures of the commercials breweriess and attempt to see how it has achieved.

v  Finding out the impact of changes in fungibility levels on productivity.

v  Aimed at discovering the credit and portfolio policies of the commercials breweriess.

v  Finally it will attempt to identify the basic causes of fungibility problems in Nigeria commercial breweriess and to recommend appropriate measures to solve such problems.

1.5   RESEARCH QUESTIONS

Based on the study the following research questions are asked:

1.   Is optimal fungibility in Champion Breweries Plc constrained by robust dividend policy?

2.   Is optimal fungibility in Champion Breweries Plc constrained by excess fixed asset acquirement?

3.   Is optimal profit in Champion Breweries Plc constrained by idle cash availability?

4.   Is optimal profit in Champion Breweries Plc constrained by love productivity of staff?

5.   Is optimal profit in Champion Breweries Plc constrained by idle time-man-hour losses?

6.   Is optimal profit in Champion Breweries Plc constrained by wasteful fraudulence expenditure?

1.6   SIGNIFICANCE OF THE STUDY

For the fact the commercial breweriess operate on fungibility and productivity motives in the mind to satisfy their major publics, the shareholders and depositors, the need arise for them to bring into agreement these two motives with the aim of satisfying these two public concurrently. With this the commercial breweries need impactive and efficient fungibility management approaches and principles that will help them realize these motives. The result gotten from this study will reveal the level of attachment of the commercial breweriess to the monetary policies (fungibility ratios) establishing by the government and these will help the government to set appropriate fungibility ratio’s and cash ratio’s that will not be harmful to the operation and survival of the commercial breweriess. It will also fungibility management and credit policy guidelines will affect minimize the impact of ilfungibility and help in providing impactive fungibility formulations.

1.6   SCOPE OF THE STUDY

This study on the impact of fungibility management on commercial breweries productivity is carried out to check the possibility of fungibility management brining a huge of profitable to the commercial breweries. It uses oceanic breweries international Plc

Effurun Delta state as its scope and it is carryout within 2007 to 2010 that’s a time frame of 4years.

1.7   LIMITATION OF THE STUDY

These covers the problem encountered. Limitation which the researcher anticipates will have some negative impact on the findings of the study. The study is prone to some constraints.

1.   Finance: Considering the economic situation in the country coupled with the limitation of fund for executive of the project the chance of travelling together sufficient fact might be hamped.

2.   Time: This study is likely to be limited by time constraint considering the need attend lectures and perform other activities like domestic chores.

3.   Co-operation of Respondents: Some respondent might not be co-operative and this might the extent of the fact gathered.

4.   Confidentially: The project might be limit by inabili0ty together relevant information because of the sensitively of some of the information which requires high degree of confidentiality.

1.8   DEFINITION OF TERMS

These are term that gives a bound knowledge and understanding about the study as well as impactive and efficiently guide the application of the issues of finding.

Abousade such term that will be considered and as follow.

1.       Cash management: This is refers to the planning and control of idle cash to ensure that there is a proper investment of cash. Cash management covers cash planning system and cash control system Nikolas Bazley Schroeder and Reyniod (1989).

2.       Dividends: This is refers to the distribution on shaming of part of profit of a company shareholders dividend could be inform of cash in dividend; stock dividend and property dividend.

3.       Fixed Assets: These are property owned by the company which is by nature fixed they are acquired not with the intention to resort but to be used in the business for a number of years. Wood and Omega.

4.       Idle Time: This is refers to the non productive how the production hour. It is usually caused by machine break down shortage of orders from customer’s electricity failure etc. Aso Olu and Nassar (1997).

5.       Internal Controls: these are procedure established by the management in order to secure on efficient and use of source resource and minimize the risk of frauds and errors to which the business is exposed Olusanya (2003).

6.       Fungibility: This refers to the ability of the firm to meet its short term financial obligation when and as they fall due. The main concern of fungibility ratio is to measure the ability of the firm to meet their short maturing obligation.

7.       Loans and Advances: These are funded credit risk which a breweries enters into with its customers.

8.       Productivity: This is the ability of a business to own profit over a period of time it is a result of a large number of policies and decision. Productivity ratio shows the combined impact of fungibility, asset management and debt management cooperating result Weiseh and Shout (1987).

9.       Ratio: It is the mathematical relationship between two quantities in form of a fraction or percentage Olowe (2003).

10.   Ratio Analysis: This is the calculation of relationship between V.

11.   A-riables after proper identification and interpretation of information about the operation and state of affairs of business enterprise Olowe.

12. Working Capital: This refers to used running the day to day affair of the business. It is also refer to as a circulating capital on net asset that is current asset minus current  liabilities. Smith Keith and Stephens (1986). 

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