Abstract
Financial planning and control when properly
employed can assist management to achieve its objectives effectively. The objective
of this study is to develop a realistic picture on how financial planning and
control can help to make efficient and effective success in business
organization which where properly addressed. The researcher make use of
questionnaire, interview and chi square method. The researcher recommends that there should be
coordination of functional management in planning and controlling the
operations of the company. This will help to achieve maximum profitability and
efficiency.
TABLE OF
CONTENTS
Title
Page i
Certification ii
Dedication iii
Acknowledgement iv
Abstract v
Table
of Contents vi
Chapter One: Introduction 1
1.1 Background to the Study 1
1.2 Statement of Problem 5
1.3 Research Questions 7
1.4 Objectives of the Study 7
1.5 Statement of Hypotheses 8
1.6 Significance of the Study 9
1.7 Scope of the Study 10
1.8 Limitations of the Study 10
1.9 Definitions of Terms 11
Chapter
Two: Review of Related
Literature 13
2.1 Introduction 13
2.2 Financial Planning and Control 13
2.3 Long-Term or Strategic Planning 17
2.4 Short-Term or Operational Planning 18
2.5 Functional Control 19
2.6 Feedback and Control 20
2.7 Objectives of Financial Planning and Control 21
2.8 Physical Control 22
2.9 Accounting Control 23
2.10 Budgetary Control 24
2.11 Sequence in
Financial Planning and Control 26
2.12 Functions of Financial Planning and Control 28
2.13 Factors to consider when Planning and Control Finance 29
2.14 Advantages of Financial Planning and Control 30
2.15 Steps in Financial Planning and Control 31
2.16 Cash Planning and Control in an Organization 32
2.17 The Cash Budget 33
2.18 The Cash Budget 34
Chapter
Three: Research Method and
Design 35
3.1 Introduction 35
3.2 Research Design 35
3.3 Description of Population of the Study 36
3.4 Sample Size 36
3.5 Sampling Technique 36
3.6 Sources of Data Collection 37
3.7 Method of Data Presentation 38
3.8 Method of Data Analysis 38
Chapter
Four: Data Presentation,
Analysis and Interpretation 40
4.1 Introduction 40
4.2 Presentation of Data 40
4.3 Data Analysis 41
4.4 Hypothesis Testing 52
Chapter
Five: Summary of Findings,
Conclusion and Recommendations 61
5.1 Introduction 61
5.2 Summary of Findings 61
5.3 Conclusion 61
5.4 Recommendations 63
References 65
Appendices 66
Questionnaires
CHAPTER ONE
INTRODUCTION
1.1
Background to the Study
It is a fact that we
are living in an era of planning and control, whether it is house wife with her
household keeping allowances, or an industrialist with his responsibilities to
the shareholders or even the government has to plan and control its operational
activities in order to achieve their goals. Planning and control are part and
parcel of our activities and it is an essential factor in business decision
making.
In a competitive world
where the key factors are cost, price, turnover and profit, planning and
control enables every individual, firm and government to have a sound
appreciation of the financial implication to his plan and action. Planning and
control can be used by any type of organization that want to survive from a
complete system covering decentralized department to organization with only a
single procedure.
As a tool of
management, it can increase the efficiency of the organization as a whole since
all the departments are involved.
Besides no business
prospers unless all its functions, accounting, finance, production, marketing
personnel and so forth are fully staffed with competent individual. The
efficiency and effectiveness of any organization therefore depends on a number
of factors which may be categorized as clarity of purpose, management planning,
control and communication. There is need to have a clear knowledge of the
objectives of the organization otherwise it will not be possible to identify
goals, set target for their achievement in form of planning, control and
management of its finance (flow of funds).
According to Brigham
& Campsey (1999), defines “financial management as the planning for
acquiring and utilizing funds in a way that maximize the efficiency and value
of the firm”. Most especially, finance is the evaluation and acquisition of
production assets, procurement of funds and disbursement of funds. It involves
four basic steps which are the functions, they includes:
-
Raising of funds
to finance project.
-
Employment of
these fund in valuable project.
-
Management of
the cash flow arising from these project.
-
Returning of
funds to their original sources
Financial manager’s
duty is to employ the acquisition, location and management of these resources,
finance therefore speeds into all segments of firms activities thus its
function must be understood by all the managers in the firm. Having known the
future financial needs of a firm; the question is how are these finance or
funds be raised, this require knowledge of the financial market through the
manager from which funds are drawn.
It also requires
knowledge of how to make sound investment decisions and to stimulate efficient
operations in the organization. These are alternative involved in financial
decisions, the choices include the use of internal or external sources.
According to Azubuike,
(2007) before looking for funds outside a firm, the possibility of providing
such funds internally should be examined.
This internal sources
is mostly used for the firms operations and should not be over looked when
planning finance. They are generated from the operations of the business, or
retained profit, depreciation provisions, tax provision and reduction in
current assets. The external sources on the other hand are made up of two main types
namely: short term and long term funds. Short term consist of tradecredit, bank
overdraft and promissory notes. Long term finance refers to funds obtainable
from loans with a maturity date. The external source consist of two broad type
which are; equity and debt funds.
Equity funds represent
the total interest of the owners of the business in the form of original shares
contributions plus subsequent addition either by additional investments or by
ploughing back profits/reserves into the business, debt funds on the other hand
are the long term debt obligation of the business and it is usually made up of
secured and unsecured debentures and bonds. The main sources of these long term
funds are capital markets and banks. The need for financial planning and
control therefore arises because financial resources are limited and costly and
even where the resources are available the areas into which they could be applied
profitably are diverse. Moreover, planning and control act as a device that
enable management to anticipate changes and adopt it. No business can exist
well, without some form of planning and control. Success in business is
proportionate to its planning and control and the skill with which it affairs
is being managed by the management.
1.2 Statement of Problem
Some business
organizations are not performing well as a result of poor financial planning
and control, some are left uncompleted after committing a very huge sum of
money due to inadequate financial management while others will remain in operation
successfully. There has been situation where organization after years of
establishment will collapse, many of them are even well planned, financed and
managed while others will stand the test of time. The questions to ask in these
situations include:
1.
Whether
inefficient financial management and control is the reasons for corporate
failures.
2.
Most
organizations are well planned and managed yet facing problems of liquidity.
3.
Some
organizations with high capital base and others with low capital still having
the same chances of collapsing as a result of inefficient management of working
capital.
This research project
is an attempt to address these and other problems militating against financial
planning and control as key towards achieving management efficiency
1.3
Research Questions
For proper guidance and in-depth
investigations of the research work, the researcher presented research
questions which form major problems of the investigation these questions
includes:
-
Does proper
management of working capital enhance profitability?
-
Is the use of
financial management and control techniques essential for achievement of
corporate goals?
-
Can it be said
that financial management and control are part of internal control procedure.
1.4
Objectives of the Study
Planning and controlling are successful
ingredients of management at all levels, proper exercise of planning and
control is often the key managerial efficiency and growth in view of this, the objectives
of this study are:
1.
To develop a
realistic picture of how financial planning and control can help to make an
organization more efficient, effective, successful and ensure growth.
2.
To find out the
extent to which proper financial planning and control can reduce business
failures.
3.
To see how
financial planning and control can be adopted and improved to aid efficient and
effective operation and suggest practical solution to these problems.
4.
To know the
extent to which financial planning and control affected various banks.
1.5
Statement of Hypothesis
This research project is based on the
null hypothesis (Ho) and the alternative hypothesis (Hi).
1. Ho: Proper
financial planning and control do not contribute to management efficiency.
Hi: Proper
financial planning and control contributes to management efficiency.
2. Ho: Long-term planning cannot affect the
company’s objectives.
Hi: Long-term
planning affects the company’s objectives.
3. Ho: Proper management of working capital does
not enhance adequate profitability.
Hi: Proper
management of working capital enhances adequate profitability.
1.6
Significance of the Study
This research work will
go a long way in helping the managers of organization to plan and control the
resources for meeting the objective of the organization through greater
efficiency, productivity and profitability.
Moreso, how cost of
product, price stability, increase in turnover and adequate profitability
remains the overall measure of management efficiency and sign of business
success.
Therefore, the
importance of this study will be in the development of method of using
financial planning and control to help management in making relevant policy
decision which if applied will result to increase efficiency and effectiveness
of the firm. This will in turn help to create avenues for the firm to achieve
their optimum profitability which will be beneficial to the shareholders,
employees, creditors and government. It is also hoped that the result will be
beneficial to students of business and vocational studies.
1.7
Scope of the Study
The study of financial
planning and control as a key toward achieving management efficiency was based
on information collected from the staffs of First Bank Plc,, Zenith Bank Plc,
Books, journals and newspapers related to financial planning and control. This
study is limited to more than one bank basically because of certain factors.
1.8
Limitations of the Study
The factors that tend to hinder the
scope of this study include:
Time:
Time posed a very big constrain in
this research work in the sense that the time for the study was limited and
could not accord the researcher the opportunity to cover some other banks that
could be involved in the research.
Accessibility: During the course of this research project, the
researcher found it difficult to have access to the population of interest and
as a result, not all the desired information was collected since enough visit
was not made.
Reluctant
attitude of Respondents: The researcher
work was equally saddled with the problem of the reluctant attitude of
respondents who found it difficult to avail the researcher with information
necessary for the work for fear of exposition.
Finance: Lack of finance was a major handicap in this
research project. This is a result of the huge transport cost involved in the
collection of information necessary for the work.
1.9
Definition of Terms
Finance:
The evaluation and acquisition of
productive assets, procurement of funds and disbursement of funds.
Planning: This is the process by which a bank solves problem
as relating to its environment.
Control: This is the process employed by management to
ensure that the course of action are maintained and that the desired results are achieved.
Efficiency: This is concerned with the quality through the
resources required to achieve an organizational goal in other words it is the
ratio of output to input.
Management: This is the process by which systems are
administered, in other words, it is the body of knowledge representing what
manager do.
Budgeting: This is an expression in financial and quantitative
term of a bank’s plan of action prepared in advance of the period to which it
relates and with the need of attaining a given objective.
Forecast: This is a process of determining what is required
of an event that will occur in future using the past behaviour of such an
event.
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