emergence of financial management as a major contributor to the analysis of
investment and financing decisions has continues to respond to external
economic and technical developments. The improvements in the efficiency and
regulation of financial markets, has provided a better basis of the development
for financial theory and its practical application.
This research work examine the impact of financial management strategies
in the management of public enterprise with special reference to
Nigeria National Petroleum Corporation (NNPC). The research investigates how the firm maximize stakeholders wealth; how the
firm maximize profit and how the firm maximize stakeholders wealth and
Existing literatures on financial management were reviewed. The study
also highlight the functions of financial manager, the links with financial
environment and the nature of public enterprise.
A sample of fifteen (15) staff was sampled out of the entire population
of NNPC for the analysis of the study. Data was garnered with the use of
questionnaires administered to selected sample. The data were illustrated on
tables and interpreted in percentage.
The study presents two hypotheses
that were formulated based on the research questions. The hypotheses were
tested with the use of Chi-Square analysis. The analysis resulted into
rejecting the two null hypotheses. Based on the decision of the analysis, it
was concluded that; Financial management plays a major role in a Public Sector
and Public enterprises maximize stakeholders’ wealth for hypothesis one and
two. Conclusion was drawn based on this judgement and recommendations were made
to both firm of study and other firms operating in Nigeria.
TABLE OF CONTENTS
1.2 Statement of Problems
1.3 Objectives of the Study
1.5 Statement of Hypothesis
1.6 Significance of Study
1.7 Scope and Limitation
2.1 Conceptual Framework
2.2 Functions of Financial
2.3 Nature and Scope of Finance
2.4 Finance Functions
2.5 Origin of Public
2.6 Characteristics of Public Enterprise
2.7 Nature of Public
2.8 The Reasons for Public
2.9 Importance Of Public Enterprise
2.10 Objectives of Public Enterprise
2.11 Scope of Finance Functions
2.12 Sources of Business Financings
2.13 Relationship between Risk
3.2 Research Design
3.3 Method of Data Collection
3.5 Method of Data Analysis
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 Procedure for the Processing and Analysing
of Data According To Test of Hypothesis
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings
and utilizing funds efficiently and effectively has been a major source of
concern to all financial managers both in the corporate World and Public Sector
all over the world. The prime purpose of establishing a firm is to ensure that
returns will not only be sufficient to meet the cost of funds but also enough
to satisfy the wealth of maximization objective of the firm, thus, raising
finance for corporate bodies has become important.
management can thus, be described as the management planning and controlling of
financial resources of a business to achieve the objectives of the business. It
has long been considered as a branch of Economics but in the early 20th
century it emerged as a separate discipline. It can also be defined as the
identification of the possible strategies capable of maximizing an organization
Net Present Value, the allocation of scarce resources among the competing
opportunities, and the implementation and monitoring of the chosen strategy so
as to achieve stated objectives.
management as a subject is of growing interest to both academics and financial
manages. On its emergence, it dealt with only the instruments, institutions and
procedures in the capital market it later dealt with keeping records and
reports, establishing funds (external financing) monitoring cash position and
paying bills. It also deals with the concepts, assumptions, principle and
techniques underlying the major financial decisions of the enterprises
financial management connotes responsibility for obtaining and effectively
utilizing the funds necessary for the efficient operation of an enterprise. The
finance function Centre around the management of funds, raising and using them
effectively. It therefore covers all functions concerned in attempting to
ensure that financial resources are obtained and used in the most effective way
to secure attainment of the objectives of the organization.
provides the background for though understanding of the nature, theories and
critical issues relating to modern financial management. It thus serves as a
necessary background to a more advanced treatment of the investment financial
management today now includes a rigorous analysis of investment of
organization's funds in assessing and obtaining the best mix of financial and
dividend in relation to overall market valuation of a firm.
field is still changing with ideas and techniques. The historical background of
the company under review is thus:Nigeria National Petroleum Company (NNPC) was
established on April 1977 under the statutory instrument Decree No. 33 of the
same year by a merger of the Nigeria National Oil Corporation operational
functions and the Ministry of Mines and Power with its regulating
responsibility, this decree established NNPC, a public organization that would
on behalf of government adequately manage all government interest in the
Nigeria oil industry.
In addition to its
expiration activities, the corporation was given powers and operational
interest in refining petrochemicals and products transportation as well as
marketing. Between 1978 and 1989, NNPC constructed refineries in Warri, Kaduna and Port Harcourt
and took over 35,000 barrel shell refinery established in Port Harcourt in 1965.
1988, the NNPC was commercialized into 12 strategic business units covering the
entire spectrum of oil industry operations; exploration and production gas
development, refining, distribution, petrochemical engineering and commercial
investment. The subsidiary companies include:
National Petroleum Investment Management
Nigeria Petroleum Development Company
The Nigerian Gas Company (NGC)
The Products and Pipelines Marketing
Integrated Data Services Limited (DSL)
Nigeria LNG Limited (NLNGN)
National Engineering and Technical
Company Limited (NETCO)
Hydrocarbon Services Nigeria Limited
Warri Refinery and Petrochemical Co.
Refinery and Petrochemical Co. Limited (KRPC)
Refining Co. Limited (PHRC)
Petrochemicals Co. Limited (EPCC)
addition to these subsidiaries, the industry is also regulated by the
Department of Petroleum Resources (DPR) a department within the Ministry of
Petroleum Resources. The DPR ensures compliance with industry regulations
processes applications for licenses, leases and permits establishes and
enforces environment regulations. The DPR and NAPIMS play a very crucial role
in the day to day activities throughout the industry.
by law a joint venture between the Nigerian
Federal Government and a number of foreign multinational corporations, which
includes Royal Dutch Shell, Exxon-Mobil, Agip, Total fina Elf, Chevron and
Texaco (though now merged with Chevron). Through collaboration with these
companies, the Nigerian government conducts petroleum exploration and
to the Nigerian constitution, all minerals, gas and oil in the country possess
are legally the property of the Nigeria Federal Government.
1.2 STATEMENT OF PROBLEMS
The basic role of
finance can be described within the context of organizations financial
requirement and their management for acquiring necessary resources, for
effective operations in public enterprises.
In order to achieve the
aims and objectives of the research study, the research study will attempt to
provide answers to the following questions.
What is the relationship between risk
What is the relationship between
investment and finance?
What is the implication of maximizing
shareholders wealth as against shareholders wealth?
OF THE STUDY
objective this study is to look deep into the concept of financial management
and the role it plays in the
administration and management of a public enterprise.
How the firm
maximize stakeholders wealth.
How the firm
How the firm
maximize stakeholders wealth and management.
The role of
financial management is what is to be examined in this study because most people
of today are ignorant of what financial management is
all about. It would also enable anyone who comes across this project to know
more about the role of financial management in a public enterprise.
1.4 RESEARCH QUESTIONS
In order to achieve the purpose of this
research study, the study will attempt to provide answers to the following
research questions in order
to arrive at a logical conclusion
Does financial management helps in
managing and controlling of the financial resources of your company?
Does Financial Management play any major
role in a Public Sector?
Do Public enterprises maximize
Do you think financial management help
in the identification of strategies in achieving desired goals?
1.5 STATEMENT OF HYPOTHESIS
The hypothesis designed
to solve problems identified in public enterprises (a case study of NNPC).
Hypotheses to be tested: Hypothesis One
Financial management does not play a major role in a Public Sector.
Financial management plays a major role in a Public Sector.
enterprises do not maximize stakeholders’ wealth.
Public enterprises maximize stakeholders’ wealth.
1.6 SIGNIFICANCE OF STUDY
The purpose of this study is aimed at
studying the relevance of financial management and its contribution in an
enterprise. This would be appreciated when it is remembered that in a business
concern organized to produce a profitable return to those who have invested in
it (stakeholders), the objectives of
management is to maximize such returns, and financial management is a technique
that can be of assistance in attaining such maximization.
significances of this study will be appreciated in the following area which
Merit of having a
suitable financial management in a public enterprise.
To show the
effectiveness of financial management in the public enterprise.
To show that
financial management helps in the co-ordination of other sectors in the
It could also serve
as a reference pint to those who might want to carry out research in similar
areas of study.
1.7 SCOPE AND LIMITATION
The scope of the
project is limited to a public enterprise. For the purpose of this study, the
scope will cover the role of financial management and its relevance in a public
enterprise. All investigation and researchers of this write up shall be limited
to Nigeria National Petroleum Corporation (NNPC). Where facts on the role
played by financial management would be highlighted. This project will be
limited by time constraint and financial constraint and also non-cooperation on
the part of the workers.
1.8 DEFINITION OF TERMS
The managerial planning and control of financial resources of a business to
achieve the objectives of the business.
Managers: This is a key manager who is responsible for the
day to day financial services and record keeping of the organization.
This involves the identification of viable projects using various techniques to
determine those that are viable.
This involves the identification of the appropriate sources of finance that
would be used to finance the projects.
This is the determination of the appropriate amount to be paid as dividend and
the profit that would be ploughed back to finance expansion in the company.
This is a coalition of a group of people that has a stake in what the company
does. It comprises of equity shareholders, preference shareholders, lenders,
employees, suppliers and customers.
These are governmental organizations which are run in the interest of the
society as a whole and they might be a gap between the benefits they provide to
society and the cost of their operation.
This is the management of money (i.e. the management of the flows of money
through an organization and claims against money).
This slates precisely what into be achieved and when the results are to be