Reference code: c005
ABSTRACT
It has being observed that much is not known on the impact of working capital management on corporate performance and it was assumed that most manufacturing companies had no good polices guiding the entire management of working capital, thereby making them to perform below expectation and as well reduce their turnover which may lead to retrenchments of staff as many heads will lie idle. Working capital has been broadly defined by many authors as current assets less current liabilities, it therefore implies that proper; management of working capital as a balancing problem, is required such that too much or less is not invested in short –term investment. In course of testing the hypothesis in this research work the statistical tools used in analyzing the result of the information are the percentage, chi-square and the z-test for proportion. The chi-square was used in testing the validity of the answers, which from the analysis it was shown that there is significant relationship between working capital and corporate performance. It was note that the only source of financing working capital to the firms were loaned and retained earnings while other sources were not made good use of, also that the companies use various ratios to analysis their corporate performance. Therefore it is recommended that policies should be well formulated in such a manner as to field the highest return on short –term investment and to contain other areas, such as effective management of working capital and its effect on corporate performance.
INTRODUCTION
Every business organization uses the available fund and other credit facilities for the purchase of its assets and raw materials that are used in the production of goods and services. The problem facing many firms is how to meet heir immediate obligations in settlement of its claims, that is, paying back the credit facilities that were secured in financing the firm’s activities. These immediate obligations are met by short term financing which constitutes the firm’s working capital.
Working capital has two basic concepts; the gross and the net working capital. The gross capital working refer to the firm’s investment in current Assets-assets that can be converted into cash within an accounting year(or operating cycle)and includes cash, short term securities, debtors, etc. Net
Working capital refers to the difference between current assets and current liabilities. Current liabilities are those claims of outsiders, which are expected to mature for payment within an accounting year and include creditors (accounts payable), bills payable, and outstanding expenses. The two concept of working capital- gross and net- are not exclusive rather they have equal significances from the management viewpoint. The gross working capitals concept focuses attention on two aspect of current assets management
(a) How to optimize investment in current assets
(b) How current assets should be financed. Investment in current assets should be just adequate, not more, not less, to the needs of the business firm. Excess impairs profitability while inadequate capital threatens solvency hence the need for management to initiate actions to correct the imbalances that may occur. Yet another aspect of gross working capital points to the need of arranging to finance current assets, which demands a good knowledge of the sources of such funds and to direct them optimally by management.
Networking capital is qualitative concept. It indicates the liquidity position of the firm and suggests the extents to which working capital needs may be finance by permanent sources of funds. A weak and negative liquidity posses a threat to the solvency of the company and also harmful for its reputation; hence requires prompt and timely action to be taken by management to normalize the anomaly before it becomes disastrous. Working capital management therefore is the administration of all aspect of current assets and current liabilities, determining the levels and composition of current assets, identifying and security from the right sources of fund and ensuring that current liabilities are paid on time. Certain factors make the management working capital important; it requires much of the financial manager’s time; it represents a large portion of the total investment in assets; critically has great significance for all forms and more critical for small firms; and the need for working capital is directly related to the firms growth. ...............
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TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION
1.1 Introduction
1.2 Statement of the problem
1.3 Purpose of the study
1.4 Significance of the study
1.5 Scope and limitations of the study
1.6 Research question
1.7 Hypotheses
CHAPTER TWO: REVIEW OF LITERATURE
2.0 Introduction
2.1 The Concept of working capital
2.3 working capital circle
2.4 characteristics of working capital
2.5 Need for working
2.6 Balanced capital position
2.7 Determinants of working capital
2.8 Issues in working capital management
2.9 Profitability Vs liquidity: Risk – Return
2.10 Estimating Working Capital Needs
2.11 Financing current assets
2.12 The concept of cash management
2.13 Facets of cash management
2.14 Motives for holding cash
2.15 Cash planning
2.16 Investment in marketing securities
2.17 Treasury bills
2.18 Certificates of deposits
2.19 Commercial paper
2.20 Bankers Acceptance
2.21 Brokers calls
2.22 Factors to be considered before the purchase of marketable securities
2.23 Accounts Receivable Management
2.24 Characteristics of Accounts Receivable
2.25 Credit Policy
2.26 Setting Credit Standards
2.27 Development Credit Terms
2.28 Evaluating Receiving Management
2.29 Establishing a Collection Policy
2.30 Optimum Credit Policy- A cost Benefit Analysis
2.31 Inventory Management
2.32 Need to Hold Inventory
2.33 Dangers of Carrying Excess Stock
2.34 Consequences of under Investment in Stock
2.35 Inventory Management Techniques
2.36 Economic Order Quantity
2.37 Order Costs
2.38 Carry Costs
2.39 Assumptions of the EOQ
2.40 EOQ Formula
2.41 Re-Order Point
2.42 Buffer Stock (safety stock)
2.43 Selective Inventory Control-ABC-Analysis
2.44 Working Capital Finance
2.45 Trade Cost
2.46 Benefits and Cost of Trade Credit
2.47 Informality
2.48 Bank Financé for Working Capital
2.49 Forms of Banks Finance
2.50 Security Required in Bank finance
2.51 Corporate Performance Appraisal
2.52 Use of Ratio Analysis
2.53 Significance of Ratio Analysis
2.54 Limitations of Ratio Analysis
2.55 Types of Ratios
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Introduction
3.1 Population Description
3.2 The Sample and Method of Selection
3.3 Research Design
3.4 Sources of Data
3.5 Primary Data
3.6 Methods of Data Collection
3.7 Method of Organizing Data
3.8 Data Analysis method
3.9 Percentages
3.9.1 Chi-square
3.10 Decision
3.11 Summary
CHAPTER FOUR: ANALYSES OF DATA AND DISCUSSION OF FINDINGS
4.1 Introduction
4.2 Analysis and Interpretation of Data
4.3 Testing of Hypothesis
4.4 Discussion of findings
CHAPTER FIVE: SUMMARY, CONCLUSION &RECOMMENDATION
5.1 Introduction
5.2 Summary of findings
5.3 Conclusion
5.4 Recommendations
References
Questionnaire
Reference code: c005
Reference code: c005
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95 Pages
Does the work meet your requirements?
Reference code: c005
Reference code: c005
_______________________
_______________________
95 Pages
Does the work meet your requirements?
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