ABSTRACT
The prerequisite for this extended essay is to know
the relevance of financial management to business growth in Nigeria. Financial
management is relevant to business growth for a well balanced operation, as
business in Nigeria are made up of small, medium and large scale enterprises
need financial management to operate well. The ultimate aim of financial
management is to plan and forecast the profit making and sourcing of funds for
business growth. Money is needed in financial management and used in making
plan work. It serves as a measuring device that can be used in measuring the
plan in terms of naira, and outsiders such as bankers and other lenders, will
do the same. In starting new business or expansion, loan is required. The
burden of proof in borrowing money is upon the borrower. You have to show the
banker or other lenders how the money borrowed will be used and more important
how and when you will repay back the loan. The extended essay also look at
budgeting, as organization, whether economic, social or political makes plan
for an organization. Without plan there is no longer an organization but an
uncoordinated assortment of individuals. Some business owners/managers carry plans
in their head, some make rough estimates on their business others express their
plans in orderly and systematic manner.
CHAPTER
ONE
1.0 INTRODUCTION
The
financial function has always been important in business management.
Irrespective of differences in structure, ownership and size, the financial
organization of the enterprise ought to be capable of ensuring that the various
finance functions: budgeting and controlling are carried out with the highest
degree of efficiency. The profitability of any business depends largely upon
the manner the financial functions are performed and related to other business
function.
During
the developing stage, financial management involves only the obtaining of funds
to finance the business, overtime, financial function has increased in its
scope to include not only the planning of finance, but incorporate the
management and control of the available resources within the firm. This also
involves the external generation, flow and uses of funds and, the study and
evaluation of the capital market.
When
talking of the capital market, its operations within the economy cannot be over
emphasized. Thus, the demand for and supply of funds for business
organizations, become a fundamental management function. Therefore, financial
management play an important role both in increasing operational efficiency
within the firm and allocating funds to productive or investable sector within
and outside the organization.
These
functions can only be achieved when there is proper planning and controlling,
coordinating and other elements of management combined effectively with the
finance function.
1.2 Historical
Background
Jomfol
Investment Company Nigeria limited was incorporated in 1989. The main business
of the company as contained in the memorandum and Articles of association
amongst others is to carry on business as farmers, farm developers Livestock
and poultry business, fisheries hatchery, producers and process or grains and
all manners of crops, manufacturer of Livestock feed and concentrates etc.
The
nature of the business activities includes; – manufacture, distribution and
sales of poultry feeds and poultry raw materials and other related activities.
The
raw materials concerns in the providing these activities includes; maize, soya
beans, Soya cake, groundnut beans, and cake, wheat brain, maize brain, sorghum,
palm kernel cake, spent grain, Bone meal, Fish meal, cottonseed cake,
methionine, lysine, premixes, salt etc.
Finance
has a big impact on business growth, as such, balance is important. Finance is
one of the most important functions of any business. Not only is finance a good
indicator of the health of the company overall, but it also holds an important
role in managing business growth.
Weather
growth is attributable to a larger market capitalization, and increase
employee, a new location, a new product or service offering, or a new
demographic, finance is the enable of such opportunities. Business success is
about growth. There are still growth opportunities in emerging markets and in
the changing advantage of these opportunities is a key goal of the whole
management team, including most importantly the financial managers and their
teams.
Almost
every organization requires professional financial management, and this
increasing need will prompt a steady growth in demand for financial management
graduates. From Chief Financial Officer (CFO) to each controller, there are a
wide range of career choices available.
Effective
financial management is critical for efficient business operations, so well
trained, experienced financial managers with a strong grasp of the operations
of all departments within their organization are value for promotion to top
management positions.
1.2 Objective
of the Essay
1.
This essay attempts to provide an
orderly framework for financial appraisal in small business management.
2.
It is aimed at inquiring on how
Government has contributed to the progress of business activities.
3.
Inquire the possible causes of
uncontrolled cash and management of resources, the techniques methods of
evaluation and performance of financial policies, method being used in business
organizations.
1.3 Statement
of Problem
Financial
management is a feature, which govern the whole process of organizational
management. Emphasis is often on planning and control used within an
organisation to strengthen area of potential weakness or to capitalize on more
effective opportunity for the business. The purpose of undertaking this study
is to identify the important role financial management practice can help in
managing an organisation to greater height.
All organisations, be it public or private
need financing to attain better positions. Hence, the problems of financing all
business may include: High Cost of capital. Since the acquisition of capital by
small business usually attract high financial interest rates these exposes them
to risk and the unsatisfactory profits is another phenomenon which hinder small
business from paying back.
Deficiencies
in financial management are another problem encountered by small business as
managers or owners lack experience in financial management. Only posses pool of
expertise in production and sales. Also is the weakness in financial planning
as they are always busy directing operations and satisfying customers having no
time to keep adequate data to facilitate financial projections.
Other
problem includes the inability of small business to save, plough back and
obtains loans due to Nigeria factors and no collateral securities.
1.4 Significance
of Essay
A
very good view at the appraisal of financing to small business organization in
previous times, has show that managers within an organisation were more
concerned with one matter or the other, and their environmental forces at
different periods.
It
is significant to know that in management financial, it requires the knowledge
of certain functions which include: – Financial and Management Accounting, Law,
Economics, Quantitative methods (like Mathematics and Statistics and Taxation).
They are not part of Financial Management but support it in that, they provide
useful information or give an understanding of the constraints within which the
activity of the financial management takes place.
The
specific functions of financial management are to ensure that funds are:
(a)
Made available at the right time,
(b)
Made available for the right length of
time,
(c)
Obtained at the lowest cost and
(d)
Used in the most effective way.
The
consequences of bad financial management can be very serious, if the above
functions are not met at times.
In
order to ensure that there is good financial management, we must develop sensible
objectives, useful concepts, techniques for analyzing situations and principles
for the guidance of action. The research will assist the management of the
organization and provide a clear defined target output for each department.
Finally,
this project will broaden the research knowledge of the topic and will serve as
a platform for further development in these area of study.
To
this end the research will be significant to management of small business for
the following purpose:
–
Formulating the policies of the
organization.
–
Planning the activities of the
organization in long term medium and short –term planning
–
Controlling the activities of the
organization.
–
Decision making.
1.5 Scope
of the Study
The scope of the study is limited to Jomfol
investment company Nigeria Limited. Being a private organization (i.e. small
scale business) that is funded by its sales revenue and other sources of fund.
It is also on how to bring about business growth in Nigeria via appropriate
financial planning and control.
1.6 Delimitation of Study
This
essay is to examine the relevance of financial management to business growth,
particularly financial management of an organization whether the organization
is either a small firm or large organization, it has various sections such as
cash office, salaries and wages, purchase and creditors, all financial
activities are taken. However, the areas covered in the essay summarized for
easy reading and understanding:
i)
Sources of finance
ii)
Issue of financing the firm
iii)
Objective and significance of financing
iv)
Financial decision making (stages and
process)
v)
Cash control and management of
organization in Nigeria.
Limitation of Study
In
the course of carrying out this research work, the researcher encountered the
following obstacles to which makes his work limited to the areas covered.
i)
Time Constraint: Time
assigned to write and complete this essay is relatively small for the research
to broaden and cover the topic “the relevance of financial management to
business growth”.
ii)
Financial Problem:
The researcher of this work is a self-sponsored student, hence, creating a
great sense of incapability for the researcher to transport himself to the
places where material can be collected, payment for browsing time and getting
valuable books on loan.
iii)
Reluctance of the organization to
release data, fact and figures which could accompany the researchers to a
successful completion of the research work without leaving any part uncovered.
1.7 Definition
of Terms
Business
Firm: An organization engaged in the production of goods
or services.
Budget:
A statement of plans and expected results expressed
in financial and quantitative terms.
Capital:
money used to start a business or to produce more
wealth.
Credit:
The ability or right to buy in return for a later
payment
Control:
Correcting
diverts to meet with actual plan.
Debt
Capital: Borrowing or loan, capital
invested in the business that must be repaid.
Depreciation:
Allocation of cost of an asset which will be used
over the asset service life.
Fixed
Capital: Long term capital invested
in the business
Forecast:
An estimate of the form’s future sales or the
probability of occurrence of future business.
Financial
Institutions – Are business organisation that lend
money.