Effectiveness Of Cash Management On Growth And Survival Of Manufacturing company

Effectiveness Of Cash Management On Growth And Survival Of Manufacturing Company

Abstract

The study was designed to determine the effectiveness of cash operation on growth and survival of a manufacturing company using Nigeria Bottling Company Plc as a case study.

A descriptive check sample design was espoused. Data was collected for funding a tone developed questionnaire which was validated and tested for trustability. A aggregate of seventeen people took part in the check.

The arbitrary slice fashion was used to elect the subjects- to answer the exploration questions and thesis raised in the disquisition, chance and ki- forecourt were used.

The result showed that effective cash operation is necessary to insure the smooth handling and survival of the company. The data collected indicated that all variable delved don’t significantly influence effective cash operation on growth and survival of a manufacturing company in Nigeria Bottling CompanyPlc.

Recommendations were thus made grounded on the findings for enhancement in the communication net work. And more so it’s important to consider other precious like stock operation, debtors operation among others affecting operation company’s growth and survival.

Chapter One

Preface

Cash is the most important asset for business operation. It’s the introductory input needed to start the business and essential tool demanded to keep the business running on a nonstop base. Cash is also the ultimate affair anticipated to be realized by dealing the products or service on an association. Infact, it’s the lifeblood of business. operative operation of cash is essential in maintaining the cash control of business cash inflow.

While operation is the process of organizing controlling, coordinating the coffers of an association in an effective and effective manner iii order to achieve direct result.

Cash operation can be defined as the art of managing( i.e. planning, controlling, organizing andco-ordinating) cash and cash fellow in an association to insure the ideal of the association which might include profitability, growth and survival( PandeyI.( 2004).

Every association estimate its unborn cash need with some applicable fashion or tools for making fiscal decision for the association as a whole, but face a abecedarian problem of managing cash with a liquidity buffer to meet unanticipated contingency. Liquidity itself is a measure of fiscal viability. It refers to a enterprises capability to pay its obligation when they come due. operation of cash involves trade off between

Liquidity Having enough cash available to meet everyday demand;

ii. Profitability/ Cost Holding high balance of cash is expensive in terms of cost investment interest. while unanticipated deficiency can be precious if exigency backing is needed.

Cash operation in any association involve the operating cash cycle which is element of the working capital. thus cash can not be studied in insulation. In a manufacturing company, cash operation covers the following

i. The provision of cash as Capital for the Company cosign out lay which generated from musketeers family or loan at bank.

ii. The procurement of raw accoutrements

iii. The distribution of finished goods to gain immediate cash or produce debtor when goods are vended on credit term.

In practice, a precisely covered budget will generally give the base for cash operation.

LITERAL BACKGROUND OF NIGERIA BOTTLING COMPANY PLC

The Nigerian Bottling Company Plc was incorporated on 22nd November, 1951 as private limited liability company with authorised share capital of N200.000 divided into 400,000 ordinary shares of 50 kobo each and issued per capital of N 130,900 divided into 261,800 ordinary shares of 50 kobo each. The entire shareholding was also possessed by foreign shareholders specially late Anacliasions George Leveiltis.

It got converted to public company in 1972, and it’s the most profitable and promising member of Leventies Group of Companies but the manufacturing units within the Leventies group known as Beta diligence Limited which was to operate as a wholly possessed attachment of Nigeria Bottling CompanyPlc.

In the light of arising developments, still, it came necessary for the new company to run singly as a commercially feasible unit.

The main business of the company is the bottling of soft drink. It’s sole bottler in Nigeria of the coca- cola and scheweppes range of soft drinks.

As at the date of this study, NBC’s authorized share capital is N divided into ordinary shares of 50 kobo each. Out of which share are issued and completely paid.

The paid up capital of Nigeria Bottling Company Plc is beneficially held as follows

Shareholders

No. of Shareholders

Holding

Nigeria citizen

Foreign shareholders

Molino Soft DrinksS.A.

Total

Its accessories associated companies and investment are as follows-,

Accessories 100

Sum it Agro Industrial Company Ltd 100

Nigeria Bottling Company Plc Benin) Ltd. 100

Apapa Chemical Industrial Limited 100

overgrown Products Limited 60

Delta Glass Plc 57

ASSOCIATED COMPANIES

Valley Foods Limited48.13

Blaize Industrial Company Limited40.00

Kupa enterprises Limited 40

Continental Can( Nigeria) Ltd.22.05

Investment

Beta diligence Limited3.67

The manufacturing process of Nigeria Bottling Products is grounded on precisely measured combination of sugar, water, carbon dioxide and attention which are 400, generally imported from the United States to insure that some standard is maintained 261,8( throughout the world.

NBC Ikeja factory, has a veritably broad organizational structure with the factory directors at its apex, directly under him are those enwrapping the functional operation position. These are the adjunct factory director, factory accountant, deals director and bottling director.

Statement Of The Problem

During the do of achieving effective cash operation, fiscal director encounters source problems, which haven’t made the operation of cash coffers an easy task.

The type of problem associated with cash operation which the operation which the study will be trying to give answer to in relation to manufacturing company includes the following

Problem of generating fund either to be used as launch-up capital or diurnal operations.

Determination of right investment openings to invest idle cash.

Determination liquidity policy to embark upon to maintain a balance between liquidity and profitability.

Identification of styles of icing cash acceptability.

Problem of backing mis- match in design or investment backing in which short term fund is used to finance long term design.

Problem of deciding on the quantum of cash to be hold by the association in order to meet up with their demand.

Determination of uses to which fat finances can be put to induce income.

Acceptable operation of receivable or debtors to insure debt recovery.

Problem of planning for the acceptable force of stock that will give constant flux of cash to be the association.

Statement Of Research Question

This study will seek to answer the following question

1. Does any significance relationship between cash operation and profitability and growth of manufacturing companies?

2. What impact does effective cash operation has on the profitability and growth operation has on the profitability and growth of manufacturing company?

3. How does an effective cash operation insure the growth and survival of a manufacturing company?

4. Will the manufacturing company grow and be more effective in its business operation if cash is duly managed?

Aim And Objects

The end of the exploration is to examine the impact of cash operation on the growth and survival of Nigeria Bottling Company Plc. They are

a) To examine the sources of Nigeria Bottling Company Plc

b) To identify the constraints and likely problem that Nigeria Bottling CompanyPlc. face in raising finances.

c) To review the being cash operation of Nigeria Bottling Company Plc for effectiveness and effectiveness.

d) To examine the effect of shy on the profitability and growth of Nigeria Bottling Company Plc

e) To make policy recommendations on effective and effective cash operation in the manufacturing assiduity.

Statement Of Research Hypothesis

The following suppositions will be tested in the design

thesis One

H0 Effective cash operation has no significance impact on profitability an growth of manufacturing company.

Hi Effective cash operation has a significant impact on the growth and survival of manufacturing company.

thesis Two

H0 There’s no significant relationship between cash operation and growth and survival of a company.

Hi. There’s a significant relationship between cash operation and growth and survival of a company.

Significance Of The Study

The significance of this study is established on the supposition that for any manufacturing company to survive and maximize profit, there’s need for similar company to manage it can effectively.

The exploration will also enable the operation to compare and differ the colorful styles of raising fund to finance the productive conditioning of the company and it’ll allow them to choose the stylish volition. More so, it’ll be of great value to the operation of the company because it’ll go the operation of to examine the current system of cash operation in the association.

It’ll go the company the occasion to maintain an optimum cash position and take corrective measure in situation of deficit or fat liquidity. The findings of this study is anticipated to educate the general and implicit manufacturer who might be seasonable to lay hand on this design in their separate line of business.

Above all, the study will enable the company to amend some system of operation which the exploration world reveal as unhappy for effective cash operation.

Compass And Limitation Of Study

This study, will concentrate on the cash operation problem of Nigeria Bottling Company Plc and its cash operation programs as respects control to cover the flux and exodus cash.

It shall only cover the finance department of the company where cash is raised, managed and reckoned for. This will enable the experimenter to gain in the company.

The attention of the study would be to find out in Nigeria Bottling CompanyPlc. operate and effective. Cash operation determine the ways by which cash operation affect the growth and survival of Nigeria Bottling Company Plc. The chief among numerous, limitation of the study is the delicate in carrying applicable information Nigeria Bottling CompanyPlc.

Another major problem militating against the smooth conduct of this exploration is the lack of acceptable finance.

Notwithstanding the loftiest limitation is stopgap that this exploration will be useful to numerous association that may want to embark on an effective and effective cash operation.

Delineations Of Terms

CASH plutocrat or any negotiable plutocrat under a cheque, including the collected balances or deposit with a bank that’s assumed to be available for use by the enterprise.

CASH BALANCE a cash budget is a summary statement of the enterprises anticipated cash flux and exodus over a projected time current asset. CASH SURPLUS This is the excess of cash generated over a cash applied performing in an inverse in working capital.