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Working Capital Management As A Tool For Cost Minimization And Profit Maximization
[A CASE STUDY OF ANAMBRA MOTOR MANUFACTURING COMPANY ENUGU]
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1.5 Research Questions
1 How does working capital management contribute to the activities of a manufacturing organization?
2 Does working capital management affect the profitability of a manufacturing concern?
3 Does working capital management lead to cost minimization in an organization?
4 What are the alternative working capital management techniques?
These
questions when answered will show how well working capital management
contribute s in serving as a tool for cost minimization and profit
maximization in ANAMCCO.
1.6 Statement of Hypothesis
In other to
determine the contribution, efficient working capital management had
made towards the performance and growth of the company, it is important
to test the following hypothesis:
H0: The profitability of a company does not depend on the level of company’s working management capital.
H1: The profitability of a company is dependent of the company’s working capital management.
H0: Working capital management is not a tool for management control in a business concern.
H1: working capital management is a tool for management control in a business concern.
H0: Ineffective working capital management has no effect on production.
H1: Ineffective working capital management is the cause of inefficiency in production.
1.7 Scope of the Study And Its Limitation
In
the process of conducting this research topic, the researcher’s
examination will only be concentrated on the case study of ANAMMCO. This
research work will cover working capital management. The researcher
intended as much as possible to conduct an adequate researcher but could
not be achieved due to some constraints. Based on the developing nature
of the nation’s economy and high demand of adequate working capital,
there is every indication that there are constraints to the validity of
the conclusion reached.
This study is limited by certain
constraints required to write of, the cost incurred in making this
project a success. Such limitations are as follows.
1) Lack of fund required to cover the cost of transportation, materials for working and typing the project and binding it.
2)
Time factor: the time allotted for the completion of this study is too
short for more objective of the results. An extension of the time given
should be encouraged. The researcher is suggesting that project topic
should be approved for the writer starting from the first semester of
the academic session.
3) Co-operation from the staff of the company:
The researcher, if not for the help of friends and well the company and
libraries could have been so difficult. The management and staff thought
that the researcher was about to carry out espionage to other
competitors. It took the researcher some time to convince the management
that the research is strictly for academic purpose.
4) Lack of exeat to leave school for research materials and to make more enquires.
1.8 Definitions of Terms
The following terms are defined in the contexts which are used in this research work:
1 Working capital management: This refers to the administration of current assets and current liabilities.
2
Working capital: Excess of current asset over current liabilities. It
is also defined as capital available for day- to –day operations.
3
Current Assets: cash and other assets that are expected to turn into
cash if sold or exchanged within the normal operating cycle of the firm
usually one year.
4 Current liabilities: A debt or obligation that must be discharged within one year.
5 Gross working capital: This means that firms investment in current assets.
6 Net working capital: This refers to the difference between current assets and current liabilities.
7 Liquidity: Refer to the available of cash or near resources for meeting company’s obligations.
8 Profitability: Accounting for profit relation to asset used in business operation.
9 Cash flow: cash receipt less disbursement from a given assets or group of assets for a given period.
10 Effectiveness: This is the extent to which a predetermined goal or objective is achieved.
11 Efficiency: The extent to which inputs are used in relation to a given of output.
12 Re-order time: The time at which new stock is due for procurement.
13 Economic Order quantity: This is the optimum order quantity for an item of stock, which will minimize cost.
14 Spontaneous financing: Sources of financing that arises from ordinary business transaction.
15 Accounting: net liquid assets computed by deducting current liabilities from current assets.
16
Working capital is the cash available for day to day operations of an
organization. One borrows cash to be able to buy assets or to pay for
obligations.
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ABSRACT - [ Total Page(s): 1 ]ABSTRACTThe objective of this research work contains working capital management as a tool for minimization and profit maximization with particular reference to Anambra motor manufacturing company, Enugu. The research design used was the survey method and the sources of data were both primary and secondary. The primary sources were interviews granted to me while the secondary sources of data were obtained from related literatures viz text books, internet, journals by different authors. Primary so ... Continue reading---
