Home » IMPACT OF EFFECTIVE WORKING CAPITAL ON THE PROFITABILITY OF MANUFACTURING FIRMS

IMPACT OF EFFECTIVE WORKING CAPITAL ON THE PROFITABILITY OF MANUFACTURING FIRMS

IMPACT OF EFFECTIVE WORKING CAPITAL ON THE PROFITABILITY OF MANUFACTURING FIRMS (A CASE STUDY OF NIGERIA BREWERIES ABA)

 

ABSTRACT

The study under investigation bothers on effective working capital management. It is aimed at finding what impact effective working capital management has on the profitability of manufacturing firms. This project is arranged into five chapters, it highlighted some critical issues such as the statement of problems, research questions, research hypothesis, the purpose of the study, the significance of the study and the scope of the study. The work also gives the overview of effective working capital management by considering five major components of working capital of manufacturing firms. The research methodology of this work aims at revising methodology used in collecting data for the study. The techniques used in analyzing the collected data are also highlighted in this chapter. The data collected were analyzed by using statistical techniques such as chi-square and correlation coefficient. Finally, the summary of findings from the data analysis as well as summary and recommendation including areas for further study enclosed this credible work.

 

CHAPTER ONE

1.0   INTRODUCTION

From time to time manufacturing firms and organizations have been making tremendous efforts in the administration of their working capital. Many of them have adopted various survival strategies to maintain sustenance. This primacy reposed on adequate recognition by financial experts of the importance of maintaining an optimum level of working capital and obviate the claim that greater importance is attached to profitability than the management of working capital.

Effective working capital management of all aspect of current assets which includes cash, marketable securities, debtors and stock (inventories) and current liabilities. The two most important aim of the working capital refers to the firm’s ability to generate the maximum profit from the available resources for its owners. While solvency means the firms continuous ability to meet maturity obligations. Effective management of working capital is areas of great concern to every business organization.

1.1   BACKGROUND OF THE STUDY

Business organization exists in a rapidly changing environment which threatens the survival. Many of them have adopted various survival strategies to maintain sustenance, hence this, has become the control philosophy of most manufacturing business concerns. For business to survive, it must make a sustainable profit in order to experience growth and to meet their financial obligations as they fall due. This aspect of survival objectives form the central focus of their research work which bothers on the impact of working capital management on the profitability of manufacturing firms.