Critical Appraisal Of Current Assets Management In Public Limited Liability Companies

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Critical Appraisal Of Current Assets Management In Public Limited Liability Companies


This project examined the management of current assets in public Limited Liability Company. It is obvious that no company can perform well without good current asset management. This cares for proper accountability and utilization of these assets for day-to-day transaction of a business concern.

A well co-ordinated current asset management will go a long way to boost productivity, availability of funds, profit and encourage expansion. Investigation ha shown that failure of many business concerns or why some companies perform below expectations lies mostly in the inability of the management to manage their current asset very well.
Current asset is an asset on the balance sheet usually lasting less than one year or any asset that can be converted into cash within 12 months. Current asset as an essential tool of any business organization needs efficient and effective management.

Current asset includes – cash, Government boned, inventors, marketable securities, account receivables, prepaid etc and also other assets that are capable of being converted into cash within relatively short period without intervening with the normal operation of the business.

The relevant data for this study were obtained through the review of related literature and use of questionnaire oral interviews as well as direct observation. This helps us to understand how the various companent of current asset should be managed.

In the aspect of cash management, cash should be reduced to a minimum, which implies that the firms should keep sufficient cash neither more nor less, and this could only be achieved through cash planning, managing cash inflows and out flow of the firm, investing the cash, white the excess should be invested in marketable securities.

In inventory control, form is faced with problem of meeting two conflicting needs to maintain a minimum investment in inventories, to maximize profitability and to minimize a large size of inventory, few efficient and smooth production and sales operation. And care must be taken to ensure that stock is ordered through purchase requisition note by the officer responsible for it.

The presentation of the analysis look the form of chi-square to test the three hypotheses formulated. From the interpretation of data, the following findings were made;

  1. Proper current asset management has increased the growth of a company.
  2. Effective and efficient current asset management enhances the profit of public limited liability companies.
  3. Proper management of current asset leads to high investment and high production.

Equally, Improper management of current asset reduced the growth of company. And losses of cash are caused not only by mismanagement off current asset but also by decrease in the value of cash as a result of socio-economic situation in the country.

The researcher therefore tends to carry out research to investigation and know actually how their current assets are manage in public limited ways for further improvement which includes;

  1. Installation of budgeting and budgetary control for efficiency
  2. Control of overheads so as to minimize payments of cash (cash out flows).
  3. Matching of receipts and payment to avoid financial insolvency.

The conclusion of the study is that since proper current asset management has increased the growth of public limited liability company e.g. The Nigerian breweries plc other companies should apply current asset management principles to ensure effectiveness, as well both non-profit in making organization.

Chapter One

1.0 Introduction:

Current assets as one of the management tolls of business organization are very important in the proper function of business and achievement of organizational goal. Current assets are those assets that are readily without loss in value and interference in the normal process of the business. Management on the other hand involves getting things done through other people by planning, organizing and cordinating. It is also a social and technical proves that utilizes resources and changes human behaviors in the desired direction in order to elicit contribution that will accomplish the objectives of the organization.

Current asset management includes – managerial decisions on how the various component of current asset are to be financial as well as planned policies on the composition level to be maintained and control to be exercised. Current assets comprises of cash, inventories, governments bonds, account reachable (debitos) mark able securities, prepaid expenses and also other assets that are capable of being converted into cash within a relatively short period without interfering with the normal operations of the business. For an organizational goal to be achieved these components of current assets should be efficiently managed.

But sundry debtors and cash tie-up investment funds can also have other costly disadvantages, for this reason, organizations should always seek to minimize or keep optimum stock and cash level of these assets and ideally reduce them to zero. However, reducing them to zero is rarely practical since to do so will result in cash greater of other adverse costs increased. The determination of the optional level for such assets is therefore the result of balancing process between the cost of holding such assets and role associated with not holding than or of holding only small amount.

It is obvious that any mismanagement of these current assets will result to loss of cash, which will eventually have an advice effects in the entire management of the company.

Therefore, any step which can be taken to minimize levels of current assets probably yield large savings in cost. Investigations has shown that many business concerns fail or perform below expectations as a result of the inability to manage their current assets adequately. The importance of a well coordinated current assets, management cannot be over-exaggerated, it goes a long way to boast productivity, availability of funds, profitability and encourages growth and expansion of the company. The researcher therefore tend to investigate and be able to come out with a profitable result on effective and efficient management of current assets in public limited liability companies and suggest possible ways for further improvement.

1.1 Background Information of the Case Study Nigerian Bareweries Plc

Scope of Operation:

Nigerian breweries plc is the pioneer and largest brewing company in Nigeria, was incorporated in 1946, and recorded a landmark when the first bottle of star large beer rolled off the bottling lines in its Lagos brewery in June 1949. This was followed by Aba brewery, which was commissioned in 1957.

Kaduna brewery in 1963 and Ibadan Brewery in 1982. In September 1993, the company acquired its gift brewery in Enugu.

On April 9,2001, it recently christened the Ama green field brewery in Enugu, the largest in Africa. The brewery will be commissioned in October 2003. Thus from its humble beginning in 1946, the company now has five operational breweries from which its high quality products are distributed to all part of this great country.

Nigerian Breweries (NB) plc has an increasing export business that dates back to 1986 currently, they export to the U.K, U.S.A, Italy, Neither lands, Germany and Kenya.


NB Plc keeps pace with key international developments, thus ensuring that its systems, processes and operational procedures are always in conformity with world-class standards. It is inline with this policy that the company established a research and development center in 1987 to enhance its research activities on all aspects of brewing operations.

Ancillary Operations/Services.

As a major brewing concern, the company encourages the establishment of ancillary business. Many of these organizations and individuals depend largely on the company for their means of live hood. These include manufacturers of bottles croon corks, labels, certons, plastic crates, and such services as hotels clubs and our key Distributors.

Social Responsibility:

Nigerian Breweries Plc is a socially responsible corporate citizen with a very good record of corporate philanthropy in the areas of education, the environment and communications among others. The company in 1994 established an Education trust fund of N100 million to take more action part in the funding of educational and research facilities I\n higher Institutions, all in all efforts to provide and encourage academic excellence in Nigeria. This is in addition to its secondary and employees. The companies have its authorized share capital of 2.4billon.

1.2 Statement of the Problem

Many companies including private public and government owned companies have been experiencing serious mismanagement of resources and loss of cash due to inefficient control of current assets which result to liquidation.

On the other hand, another problem facing public limited companies is global economic recession in Nigeria economy, high rate of inflation and fluctuation I exchange rate has coursed serious problem in processing stock and other current assets items that enhance growth of the under utilization of resources and improper inputs that resulted to the decrease in the total revenue generated by companies.

Another difficulty encountered in management of current asset is debt managements of current asset is debt management. The terms of credit, sales is no more maintained by distributors and this cases shortage of fund that would have this cause shortage of fund that would have been available for the normal operation of the origination. This entire problem hinders the efficient management of current asset.
At the conclusion of this study, the researcher will be able to come out with the possible remedies to these problems associated with current asset management and suggest ways for improvement.

1.3 Objectives of the Study

The study addressed the following objectives;

  1. The purpose of this study is to critically appraise or value the rate at which the management makes policies for current assets administration in public limited labiality companies.
  2. To as certain how funds are really being civilized and adequate management of current assets with a view to finding solution to mismanagement.
  3. To identify reason why public limited companies keep proper current asset management
  4. To determine the extent to which current assets management tools have enhance in the proper functioning of business and achievement of organizational goal.
  5. To assess and evaluate whether current asset management has gone a long way to boost productivity and encourages growth and expansion of the company.
  6. To make recommendations and to prevent further lapses and recommend appropriate measures to be adopted in efficient utilization of resources.

1.4 Research Question

The following are the research question of the study:

  1. Has the current asset management tool enhances proper functioning of business and achievement of organizational goal.
  2. Has it increased the profitability of the public limited companies?
  3. Has it reduced the problem of debt management?
  4. Has contributed for proper accountability and utilization of these assets for day-to-day transaction of a business concern.

1.5 Statement of Hypotheses

The following hypotheses tested in the study:

Hi: Alternative Hypothesis
Ho: Null Hypothesis

  1. Hi: An appropriate current asset management has increased the profitability and growth of a company.
  2. Hi: High rate of inflation and fluctuations in exchanges rate have a negative effects on the current asset management.
    Ho: high rate of inflation and fluctuations in exchange rate have no regreative effects on the current asset management.
  3. Hi: Economic trend affect current asset management.
    Ho: Economic trend dose not affect current asset management.

1.6 Significance of the Study

This study will involve benefits, which will be of interest to some groups, which in the final analysis will help and solve most of the problems encountered by public limited liability companies, especially the Nigeria breweries Plc. This study will be also be of great benefit to business educators, students in business study will also benefit from this research work.

It will also assist private and public companies in checking the event of their progress and lapses, as to adopt the required steps in the control and management of the current assets. Some of the beneficiaries include:

A. The Management of Public Liability Companies

The management of public liability companies like the management of Nigeria breweries has benefited from current asset management because it has helped them in managerial decision on how the various component of current assets are to be financed as well as plannined policies on the composition level to be maintained and control to be exercised.

B. Managers:

The managers in every organization will in no small measure gain from how they will manage their current asset to ensure profitability as one of the factors that contribute towards the progress of the company is the effective and efficient management of their current asset.

C. The Government:

The government has gain immensely from current asset management because those their bonds and securities are well utilized and secured which ensures stability in an economy.

1.7 Scope Limitations and Delimitations of the Study.

The researcher intended to restrict the study on Nigeria breweries Plc Enugu branch among many public limited liability companies in Nigeria. Because of some constraints time and monetary constraints.

Limitations of the Study

Like every research work, a lot of things posed as some limitations to the research they includes:

(a) Death of Data:

The researcher was hindered to a large extent due to the scarcity of data on the topic. Frantic efforts were made to gather more information that would contribute positively to the study but with minimum success.

(b) Lack of Finance:

It could not be an overstatement to say that this study required a great ideal of finance so that one would come out with reasonable and acceptable research findings that would stand the test of time. Unfortunately this finance was not at the disposal of the researcher.

(c) Poor Access to Data:

The researcher encountered serious problem as it concerned access to data. She had it tough with some personnel. Who was not ready to release helpful information, her interaction with some of the workers was so poor that she was regarded as an instructed to their secret shine”.

(d) Others

Problems in combining the research work, class lectures, exams and official duties as well as family issues is very infini testimal, but these are mandatory activities and hence the researcher was deprived of many other activities to ensure their fulfillment.

1.8 Definition of Terms

Current Asset:

These are those assets that are recash may be held as buffer to meat unpredictable financial needs. Cash balcne held to cover the future contigencadly converted into cash usually within one year without loss in value or interference in the normal process of the business.

Government bonds:

This is a certificate of debt to be paid by the government to an individual holder and it usually bearing a fixed rate of interest. It is also an assurance or a sealed instrument under which the government guarantees to pay a stated sum of money on or before a specified date.


This is detailed offer description of list of list of articles given code. It could be also referred to as that stock of the product that accompany is manufacturing for sale and the components that make up the product inventories could be classified into various types which are as follows:

  1. Raw Materials
  2. Work-In-Progress (W.I.P) ie partly finished good and materials held during manufacturing stages.
  3. Finished Goods: ie completed products that are ready for sale or distributed, this definition is given by Adibe (1995)
Marketable Security:

These near money assets in which precautionary balance of the firm is investigation. They include treasing bills, certificate of deposit and bankers acceptance and repurchases agreements. Mark able securities are held as buffer against cash storage and are used for temporary investments. The definition is by Aguolu (1995) P.2.

It is a certificate of stock that is readily salable or buying in marketable values. The definition is given by Leslie 1979) P3.

Chapter Five

Summary of Findings, Recommendations and Conclusion

The research findings, which came about as a result of the analysis of collected data and the subsequent tested hypotheses tested hypotheses are summarized below:

5.1 Summary of Findings:

  1. Efficient current asset management is generally imported to business concerns especially manufacturing in fixed assets be it renting or using plant and equipment. It cannot avoid inventories the current asset cash, inventories and other variables. Therefore, current asset is of great significant to finance management of any corporations.
  2. In this aspect of inventory control, are must be taken to ensure that stacking is ordered through purchase requisition by the person responsible for it. Any material required by production or service department are ordered through material requisition which shows the full details of items to be issued and the purpose for the issue.
  3. Proper care should also be taken to ensure that stock out are allowed, the firm should maintain its maximum and minimum stock level, this will go a long way to increase the goodwill of the organization.
  4. Trade credit is considered as an essential marketing tool acting as bridge for the movement of goods through production and various channel of distribution to the ultimate customers. Therefore adequate measure is required as production against unanticipated cost from increase in debtors and the cost of allowing credit should also be given consideration.
  5. Cash – as one of the current asset items occurs in two forms cash-in hand and cash at bank. Cash is the money, which the company can disburse immediately without any restriction. A strategic plan for the control and use of cash is know as cash planning.
  6. Cash budget is a summary statement of the firms expected cash inflow and cash out flows over a projected time period. It is a useful device to draw attention to future requirements to as to enable proper preparation to be made, it is derived by reference to:
    1. The master budget and
    2. The structural factor, which governs the turning of cash flows. Loss of cash is caused but only the mismanagement of current assets, but also the decrease in the value of cash as a result of soci-economic situation in the country.

5.2 Recommendations:

Having examined the problems facing firms, the researcher wish to recommend that the financial manger and controller should.

  1. Review the expansion of account receivable and inventories as investment decisions, using value maximization as the acceptable framework.
  2. Although every firm have credit policy, it is advised that it should have a guideline and procedure for granting credit tom customers, so that the officer responsible for granting such credit will know vividly the policy to follow and incase the office is removed from the office, the newly employed personnel to do the job will find a ready made guidelines to follow.
  3. The credit officer should be able to evaluate and access the credit application and carryout comprehensive and meaningful investigation and analysis to determine if the applicant will be able to comply with required obligations. Through this procedures may be expensive or involve much cost, but the firm through evaluation is worth more than the cost.
  4. Installation of budgeting and budgetary control for efficiency.
  5. Matching of receipts and payments to avoid financial insolvency. Hence harmonization of credit policies so as to match suppliers credit terms.
  6. Controls of overheads so as to minimize payments of cash (cash out flows)
  7. Recommendation for further research further researches to investigate the possibility of applying current asset management principles in nonprofit making organizations such as the church and other charitable organizations.

5.3 Conclusion:

While current Asset is recognized as the heart beat of the company, the fact remains that current Asset management is of great importance for the effective running of most manufacturing firms.

The foregoing literatures have also shown that the place of current affluence in a business is of primary importance.

All these afore mentioned facts have made it essential inevitable that current asset should be managed affectively and efficiently if the objective of the firm would be achieved. It is also a positive step towards profit maximization.

There are cases of liquidated business organization, not because of poor trading activities, or unfavorable economic condition but largely due to poor current asset management.

All business concern is advised, therefore not only to recognize the fabric of administrative machinery, but to also consider good current asset management. These researches have able to unveil some of the problems facing ineffective current asset management in manifesting forms. It is predicted that the future is very bright for a manufacturing firm. That carries out effective current asset management.

5.4 Limitations of the Study;

This study is limited by the following factors:

  1. Times, which constrained the research to only the Nigerian breweries Plc Enugu 9th mile comer.
  2. Fiancé was also a handicap to this research.
  3. During the distribution of questionnaire, personnel’s were not met as demanded because often than now they were on outside duties when I call in their officers.

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