Appraisal Of Working Capital Management In Brewery Industries (A Case Study Of Guinness Plc Lagos)
1.1. Background of the Study
After the commencement of the business it will soon occur to the enterprenuer that business operation are not an easy as he assumed. As he aim the business he will realize the most of the profit margin (if at all he makes them), which he assumed will be available for further financing of the business may not come forth when some will be tied to account receivable or stock of hirentorius.
It will further down on the enterprenuer that if he meets most of his customers demand expand the scope of the business and increase the profitability of the organization, he will always need the service at credit facilities by surplus.
Problem however will arise for unprepared managers with naïve attitude in respect to working capital will suddenly discover that they are handling and not be able to meet the target profit, hence he might not do anything to keep the business going they will realize that the blood stream of the business i.e working capital has stpped flowing or is not properly flowing and that can lead to the death of the business.
The focus of this research work is to stress the importance of working capital management in any brewing industries due to negligence of the fact, many organization that has sample opportunity to make it big in the economic retarded while others are experiencing severe cut down in profitability.
From the fore mentioned reason, am now making it as a matter of responsibility to look at this subject matter so as to cut down, if not completely eliminated, the problem of working capital management and it’s effects on the profit of a brewing industries and a case study of guiness Nigeria plc lagos.
1.2. Statement of Research Problem
The statement of the research problem to be discussed in this research work is listed below:
- What are the level of working capital require to meet the liquidity and profitability of the brewing industries?
- How can management placement, which generate into management in efficiency in planning and controlling of working capital, could be reduced?
- What is the working capital cycle in brewing industries?
- What are the working capital determinations and their effect on the profit of brewing industries?
1.3. Objective of the Study
The research is embarked upon to achieve the following:
- To show that health condition of a company is revealed first, in the working capital
- To examine the importance of level of items, ratio analysis of working capital management
- To establish the relationship between the efficient management of working capital and profit of brewing industries
- Excess and inadequate of working capital has negative effect on the profitability level.
- To make a recommendation.
1.4. Significance of the Study
The information to communicate can be used by the management of Guinness plc and any other entrepreneur and brewing industries.
- In formulating policies concerning working capital
- In planning and controlling the activities of the enterprises.
1.5. Research Hypothesis
A research hypothesis can be seen as tentive statement, which is formulated and push forward for the purpose of empirical testing (hypothesis) the research question can be state or formulated in two ways:
- H0- the management of working capital and profitability of brewing industries is not a catalyst for the growth and survival of Nigeria economy.
H1- the management of working capital and profitability of brewing industries is directly related to cash or profit management.
- HO: management of working capital and profitability of brewing industries is not a catalyst for the growth and survival of Nigeria economy
H1: the management of working capital and profitability of brewing industries is directly related to cash or profit management.
- H0: there is significant relationship between adequate management of working capital and profitability and organization survival
H1: there significant difference between good working capital and profitability and employees efficiency
1.6. Scope of the Study
The scope of these research is to study the appraisal management of working capital and profitability of the brewing industries, it limit the research work to look into the trading and other services of brewing industries, also, to evaluate and assess the marketing department, production department and finance department.
1.7. Limitation of the Study
This study will be limited to the assessment of management of working capital and profitability of brewing industries in Nigeria ( a case study of Guinness plc, lagos) this project work will mainly focus attention on the various strategies or policy used in managing the working capital and profit maximization of brewing industries by the directors of guiness plc, lagos.
1.8. Definition of Operation Terms
I. Acid Test or Quick Ratio:
This is to show which cash and those assest most readily convertible to cash can meet the demand of short term creditors
II. Current Ratio:
This is to show the extent to which short term asset that will be converted into cash within cover creditors
This is stock of the product a firm is manufacturing for sales and the component that make up the product
This is the study of body that responsible for manipulating for available resources (factors of production) to achieve the organization objectives, they are concerned with internal control profit of the company and efficient management of assets.
This is the excess at total revenue over total cost of the manufactured product.
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