IMPORTANCE OF WORKING CAPITAL MANAGEMENT IN MANUFACTURING COMPANY

ABSTRACT

This study is an attempt to critically examine the reliance of working capital in manufacturing organization and to highlight its various effects. The reason for embarking on this research is therefore to probe into the problem areas, objectives etc as well as making the necessary suggestions.  However, the research work is divided into five chapters.

The first chapter deals with the general introduction of the subject maters.

The chapter two contain interaction related to the topic from which contains assumptions was made to formulate hypothesis.

The chapter three deals with the research methodology, research design, selection of the data collection method and conduct of field work.

The chapter four deals with the analysis and interpretation of hypothesis in all, some hypothesis were formulated duly tested and validated so as to draw a logical anachronism.

Finally, the chapter five deals with, the summary of findings together with conclusion and recommendation.

CHAPTER ONE

INTRODUCTION

1.0    BACKGROUND OF THE STUDY

Working capital which is incremental value of current assets over current liabilities is a very essential factor in corporate operations and survival. Its importance lies in the fact that it is the blood of any organization without which an establishment will cease to be a going concern.

Therefore, its strategic importance to corporate survival necessitates that it should be prudently managed in order to ensure its continuous presence and adequacy.

As much as inefficiency in working capital can lead to corporate deficit, over investment in working capital can equally be disastrous, since money that could have been profitably invested elsewhere to yield returns is being tied up.  It is very important for the management of an organisation that investment in working capital should be optimized

Appropriate sources must be found, corporate working capital requirement and viable investment areas must also be found in order to invest in excess funds, which can be immediately realized and used to supplement the working capital base, whenever the need arises.  This research paper focused its attention on working capital after having carefully considered the nature of working capital, its importance to management and its undiminished vantage of place in the finance structure and component, as well as its importance to corporate survival.

This research takes Nestle Nigeria Plc as its case study and intends to corroborate findings by analysis of three similar companies namely, Foremost Diaries Ltd., Cadbury Nigeria Plc and Nigeria Bottling Company Plc belonging to the Foods, Beverages and tobacco industry of the company chosen as case study.

1.1 STATEMENT OF PROBLEM

The inadequacies necessitating this investigation are highlighted below:

a.            Lack of awareness as regards the importance of working capital management.

b.            Inability of management to detect and normalize over or under investment in working capital.

c.            Appropriate appreciation of the affects of over or under investment in working capital on corporate survival.

     d.     Inadequate knowledge of the rudiments of working capital management.

e..           Ineffective follow up on the factor militating against affective management and control of working capital                                                                                                                                  

This research study attempts to provide solution to these probing questions after having carefully analysed the data collected.