Source Of Finance In A Manufacturing Company (A Case Study Of Global Soap Detergent Ilorin)
Table of Contents
- Title Page
- Table of Contents
- 1.1 Background of the study
- 1.2 Statement of the study
- 1.3 Objective of the study
- 1.4 Relevance of the study
- 1.5 Scope of the study
- 1.6 Organization of the study
- 1.7 Definition of the term
2.0 Literature Review
- 2.1 Historical background
- 2.2 Formation of the manufacturing company
- 2.3 Source of finance
- 2.4 Contribution of manufacturing company to the economy
- 2.5 Adverse effect of manufacturing company to the economy
3.0 Research Methodology
- 3.1 Historical background of the case study
- 3.2 Restatement of the research question and hypothesis
- 3.3 Characteristics of the study population
- 3.4 Date collection instrument
- 3.5 limitation of the research work
4.0 Presentation and Analysis of Data
- 4.1 Data presentation
- 4.2 Data analysis
- 4.3 Testing the hypothesis
- 4.4 Finding
5.0 Summary, Conclusion and Recommendation
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendation
1.1 Background of the Study
Finance is how business organization manages their resources, which contribute to economic growth, the decision on the source of financing in manufacturing company is that most unavoidable and continuous aspect in forming company.
Thus research works, geared toward focusing mainly on the sources of finance for manufacturing companies, attention will be the most profitable source for the company.
Finance is very importance and vital to the setting up of any business activity and could said to be bedrock of any business organization.
The material contained here is prepared bearing in mind the interest of the prospective investors who want invest their money in business and for a manufacturing company.
It is also for those who have be in business for quite a long time but have made little or no impressive progress because of lack of sufficient finance.
When finance becomes available, industrial development is initiated and now investment opportunities arise, thus, newly development access to fund on reasonable terms indices or encourage manufacturer companies to expand there horizontal to conceivable opportunities.
The word manufacturing means that are a process which involve tools and laboratory produce goods for use or sale. The term may refer to a range of human activity. In other words manufacturing is processes of a raw material are transferred into finished goods on a large scale.
A company is defined by C.J MARSHAL (1819) as associations of a person sanctioned by government act decree become a corporate body for a special purpose.
The Nigeria Company can define as manufacturing company as of formed and registered under the companies’ act 1968 or one formed and registered before enactment of the act.
Judging from the company act 1968, manufacturing company can be defined as a process where raw materials are transformed into finished goods.
1.2 Statement of the Problem
The future of the Nigeria economy resides in business, But there are money problem hindering the growth and development of there companies, while some of these problem are inherent other are exogenous.
The major problem confronting manufacturing company is finance because the growth and development of the firm is influence by the financial policies.
1.3 Objective and Relevant of the Study
The aim underlying the study of source of financing a manufacturing company can be summarized as follow;
- An introduction to the different source of finance available to management.
- An overview of the advantage and disadvantage of the different source of funds.
- An understanding of the factor governing the choice between different sources of funds,
- To educates and guide future analyst who may wish to undertake the study either as management account or financial analyst
1.4 Scope of the Study
Due to certain constraints the writer cannot carry out an intensive research in the project work. These constraints are;
- The time associated to write up
- Inadequate finance
- Another constraint is those managers are not willing to disclose the affairs of the company.
1.5 Plan and Organization of the Study
This study consists of five organized chapter have been designed to suit the topic of the study.
- Chapter one give an insight into the study, it discusses the objective and importance of the study.
- Chapter two deal with literature review. It deals with characteristics of manufacturing companies and theatrical insight into in to sources of finance and cost of capital.
- Chapter three, describe the method of data collection from the organization under the study and the sample population.
- Chapter four, this chapter form the care of the project where is data presentation and analysis and appraisal of the source base on information from the data collection.
- Chapter five is a roundup of the study. it contains the researcher ‘summary, recommendation and conclusion.
1.6 Definition of Term
Appraisal is an evaluation of something with respect to its value cost adequacy as that quality which gives it a value. It could be said to be the setting of price or estimating the value of a thing.
Finance is the resources or capital available for a particular venture. Finance is critical for efficient organization of production activates
5.0 Summary, Conclusion and Recommendation
In summary the types of the financing to be include in capital structure of any firm therefore largely defend upon the object or goals of the management and the desire of the individual that make the form available.
This therefore, gives birth to the france work within which management and supplier of fund make the decision on the capital structure of the firm considering the two ways sides objective (that of management are of the lender) the usually factor taking into consideration are risk, control cost or income, flexibility or liquidity.
It would not be a wrong observation to say that the highest risk creditor’s sources are those with the nearest maturities or nearest periodic principal payment. It then means that the permanent source of capital such as leasing and long attract the risk of the possibility of the supplier of capital taking some adverse act against the firm which may lead to either partial liquidation or dissolution of the firm. This can be especially pronounced when there is a difficult. Risk may be seen as exposure of a thing value to loose or injury.
Following the profitability of equity source of finance on global soap product. In line with data collection, it is concluded that equity share as the most profitable source of finance the company.
It is good to appraise the source of capital available to manufacturing company so as to know the most profitable for a company to adopt.
One heart is therefore tempted to say that retained earning is of greater advantage in financing manufacturing company than the other source because of their reason below.
There is no need for any negotiation with its source of supply since it is immediately available to the company as it is realized.
It neither has any influence on the control of the corporation nor is there any cost comparable to the cost of floating a fresh security. It retention neither increase the risk of the corporation nor does it have any legal maturing data.
From the research conducted taking the economic situation into consideration, the research cannot be completed without recommendation may recommendation would be based on the knowledge gained from consulted text book and from the data gathered from the company.
It’s recommended that management should take advantage of benefit from the issue of share rather; they make use of bank loans as their major sources of capital the case study uses source from finance house which requires high rate of interest.
Considering the constant.
The company generates a lot of found from this source in which if uses part of it in running organization.
At the end financial year of the company after comparing the expenditure and revenue of the company the revenue side always slave favorable.
And this profit always come from the business in which the company finance through the equity share. So all the deductive expenses will be deducted. The remain profit will be divided into equal two parts one would services as dividend which will be distributed among the shareholder and the remaining part will be ploughed back to business to finalize their tune term project like purchasing of fixed asset e.g machinery purchase and to maintain the old ones.
This is retained earning as it is the part of the profit made that as been retained in the company rather than distributed to shareholder, that is earning forgone by shareholders but are ploughed back into the company for investment.
Therefore share capital server as a must profitable source for the organization chosen as the case study. Increase is interest rate of bank loans and financial houses Global Soap and Detergent Industry and other Nigerian companies should view shared as a good alternative.
Also every manufacturing company should try to employ financial expert who will given detailed information about the financial needs of the company.
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