CHAPTER ONE
1.0
GENERAL
INTRODUCTION
1.1 BACKGROUND
TO THE STUDY
The
prevailing economics situation is a resulting largely from extensive
mismanagement of the country; resources have made issues of management, one of
the paramount importance in the business world where the financial organization
sector has a pervasive influence: the management of working capital cannot be
overemphasized.
Working
capital management can be said to the life blood for the sustenance of any
organization the study of financial organization is incomplete without an
in-depth, thoroughly and critical analysis of techniques of its working capital
management.
Working
capital is concerned with:
(i)
Financial of working
capital component
(ii)
Investment in asset
(iii)
Usage of working
capital
It is the art of science of planning
organization directing, controlling and utilization of working capital
component as well as determines the appropriates mix of working capital
management. It can also defined as that aspect of managerial finance or
management accounting, which is concerned with the activities involved in
sourcing financing and investing in the components of working capital.
In
managing working capital, companies separate current execution into their
component units for policy formulation and execution. This is because are of
different nature, which makes it imperative that they will be considered and
managed under a unique appropriate.
1.2 STATEMENT OF THE PROBLEM
The
strategic role that working capital management plays in all organization cannot
be over-looked.
This
implies that working capital management is the main pillar of the sustenance of
any financial organization.
The
study or organization financial statement in incomplete without a thoroughly
and perfect understanding of the techniques of its working capital management.
In
examine the management of working capital answers to the following questions.
i.
Does effective stock
management increase organization performance?
ii.
Does cash management
enhance business survived
iii.
Does the debtor’s
management increase business sales and profit?
iv.
Why is the need to
invest incurred assets?
v.
How many inventories
are to be carried out and how de we get funds in pay for them?
vi.
What should be the
proportion of long term and short term funds to finance current assets?
vii.
How the working capital
management if finance and organization?
viii.
How many funds to
finance should be invested in each type of current assets?
1.3 JUSTIFICATION OF THE STUDY
Working
capital management has been identified an essential area in efficient
management of the company. The failure to plan or forecast working capital
level and related cost to the basic reasons for approach. Though with an
objective therefore, the ultimate aims of working capital are:
i.
Maintenance of adequate
level of working capital allow for smooth operation.
ii.
To prevent stock – out
iii.
Maintenance of adequate
cash position to keep the firm liquid and to use cashes in a profitable ways.
iv.
Management of adequate
mix of working capital components the success of working capital management
depend upon the knowledge of cash flow position of the companies, the knowledge
of cash flow position of the companies, the various components of the working
capital from the basic of this project wish to subsequent chapters. The failure
of a product or the entire company.
Therefore the problems
of founds management have always been of great concern to the financial
managers of both private and public co-operation all over the words they is to
show the merit of the working capital as a tool for business survival, to serve
as spring banned for financial organization to produce answers for their
current problem of funds management.
1.4 OBJECTIVE OF THE STUDY
Working
capital represents a large proportion of total investment in the operation in
the operation of any financial organization the management of this aspect of
firms resources is crucial to the success and survival of any company.
A
company can be seen as a series of cash flow. In order words. These streams of
cash flow constitute the components of working capital in view of the above,
the following of the relevant objectives and purpose of the study of working
objectives and purpose of the study of working capital management especially in
financial organization, such as unions bank of Nigeria plc. This is a case
study in this project.
1.
To identify the various
method or techniques for managing the individual component of working capital
in financial organization concern in particularly how union Bank of Nigeria
plc. Manage the component of its working capital.
2.
To determine an
optional working level
3.
To examine operational
and financial efficiency of union bank plc in term its ability to earn on its
owners.
4.
To identify the
component of working capital the relevance of this study can be seen in terms
of the importance of working capital smooth operation of the firm and it
ability to invest in working capital, in most efficient and effective manner.
This at the end of this project, it should possible to review, assets and
critically analysis the method of managing the working capital of union Bank of
Nigeria plc.
Over all additional contribution should
have been to those of the early writers on how best to manage working to ensure
optimum level of investment.
1.5 SCOPE OF THE STUDY
Working
capital management is used for business survival in many fields of business
world. However, this study of working capital management as tool for business
survival is limited to financial organization and the study bases on union Bank
plc. branch
the study concentrated on the perception of the management, intermediate and
hour level work. In the effectiveness of this model as tool in business
survival. Where by working capital techniques are used by the management of
considered in making decision in the company.
1.6 LIMITATION OF THE STUDY
The
first problem encountered in collecting our data was inadequate of data on the
study, the topic been relatively new, text are not adequate gotten on the
subject. Also the reluctancy in the attitude of staffs,
Finance
and the constraints were another limitation to data collection problems and the
prospect of small scale business. This can stem from the fact that the
researcher had to go to the office time without number (which were in kwara
state).
This
the limitations centre on transportation cost and time because we are a student
who had to combine project work with our academic.
1.7 PLAN OF THE STUDY
This
research work examine the important of effective working capital cash, cash
management inventory management and debtor management.
Part
three of this project death with the research methodology procedure, research
design, and generalization of sample size that related to the brief historical
background of union Bank plc in Nigeria part four which dealt with data
analysis and interpretation of findings, questionnaire analysis.
1.8 DEFINITION OF TERMS
This
is an act of recoding, classifying, summarizing in significant number and in
terms of money transaction and events which are in part at least of financial
character and interpreting the result thereof.
Data:
A set of fact, information collected and ready for use
Cottage
industry: Any group of people or object which
are similar in one way or more and which form the subject of the study in a
particular survey.
Sample:
This is defined as of the whole
Credit
policy: This is a clear act guideline on the
extension of credit facised when customers are allowed to make immediate use or
to carry goods away and make.
Cash
Flow: This is the movement of cash in and
out of the business. It is synonymous with the cash account.
U.B.N:
Union bank of
C.B.N:
Central Bank of
Business:
can be define as any activities pat in place by a man in ofter for him/her to
earn a living.
Working
capital: Can be defined as the resources
available for conducting day-to-day operations of an organization; normally. It
is the excess of current assets over current liabilities.
Management:
It can be defined as a vital sector of our society. Our economic needs and
wants are met by business and our lives are touched daily in countless. ways by
the operations of business people.
Investment:
Can be define as the commitment of a sum of money usually large into a business
or project with the aim of reaping a stream of
As
set: can be described as which belong to the
income business like building motors machinery etc.
Liabilities
: can be define as the
indelitedness of the business to outsider. It is the claim on the assets of the
company.