THE IMPACT OF WORKING CAPITAL MANAGEMENT POLICIES ON FIRM PERFORMANCE OR PROFITABILITY

TABLE OF CONTENTS Title Page.I Certification..II Dedication.III Acknowledgements...IV Table of ContentsVI Abstract. IX CHAPTER ONE: INTRODUCTION

1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 2.1 2.2 2.3 2.4 2.5

Background to the Study Statement of the Problem Objectives of the Study Research Questions Research Hypothesis Scope of the Study Significance of the Study Structure of the Study Introduction The Concept of Working Capital Nature of Working Capital The Component of Working Capital The Concept of Working Capital Management

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.5.1 Current Assets Management 2.5.2 Current Liabilities Management 2.6 2.7 2.8 Financing Model Performance measure HISTORICAL BACKGROUND OF DANGOTE CEMENT PLANT
RESEARCH METHODOLOGY

CHAPTER THREE:

3.1 3.2

INTRODUCTION RESEARCH DESIGN

3.3 POPULATION AND SAMPLE PLAN 3.4 TYPES AND SOURCE OF DATA

3.5 3.6

INSTRUMENT OF DATA COLLECTION TECHNIQUES OF DATA PROCESSING AND ANALYSIS

3.6.1 MODEL SPECIFICATION 3.6.2 DECISION RULE 3.7 VARIABLES OF THE STUDY CHAPTER FOUR: INTERPRETATION 4.1 INTRODUCTION DATA PRESENTATION, ANALYSIS AND

4.2 DATA PRESENTATION AND ANALYSIS 4.3 Analysis and Interpretation of data on Table I 4.4 Test of Hypotheses and interpretation results in table 1 4.5 Analysis and Interpretation of data in Table II 4.6 Test of Hypotheses and Interpretation of Results in Table II 4.7 5.1 5.2 5.3 5.4 Discussion of Findings Summary of Findings Limitation Conclusion Recommendations
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

APPENDIX I APPENDIX II

CHAPTER ONE 1.1 Background to the Study

Working capital management is an essential tool in the success story of any firm in terms of profitability. Aminu (2003:95) defines working capital or gross working capital as a firms investment in short -term assets that is cash, account receivable, short-term or marketable securities and inventories. A good or positive working capital enables a firm to access finance from short-term creditors and even long term creditor. In the long-run creditors seek firms with a positive working capital since it serves as an assurance of loan repayment. The issue of a positive working capital calls for working capital management which according to Pandey (2005:586) is the administration of all components of working capital-cash, marketable securities, debtors

(receivables) and stock (inventories) and creditors (payables). He further states that the financial manager must determine levels and composition of current assets by determining the right source to finance current assets and that current liability are paid in time. The goal of working capital management is to ensure that the firm is able to continue its operation and that it has sufficient cash flows to satisfy both maturing short-term debt and upcoming operational expenses. This will obviously have significant effect on the firms financial performance According to Smith (1980) management of these short-term assets and liabilities warrant

investigation since working capital management plays an important role in firm profitability and risk as well as its value. Although there are different variables/components of working capital management policies, this study however concentrates on only three working capital management policies namely, accounts receivable period policy, inventory period policy and cash conversion cycle policy. In other words the study tries to ascertain the impact of working capital management policy variables like account receivable period policy, inventory period policy and cash conversion cycle policy on organization profitability taking Dangote Cement Plant Plc, Benue Plant as a case study.

1.2

Statement of the Problem

Financial performance of corporate organizations is a major source of concern to the financial manager, the entire management as well as the shareholders. This is more so as it is expected that every corporate organization of any kind should make a fair return to justify its existence. This obviously calls for proper management of working capital which according to many researchers like Deloof (2006), Smith (1980), Lamberson (1995), Eljelly (2004), Hall (2002), Soenem (1993), have a significant impact on firms

profitability. In their research work, they discovered that there is a significant impact of working capital management policies on organizational profitability.

The basic problem of this study is to ascertain whether or not working capital management policy has any significant impact on profitability of a firm. In other words whether or not working capital management policies like accounts receivables period policy, inventory period policy and cash conversion cycle period policy have any significant impact on a firms profitability taking Dangote Cement Company Plc, Benue Plant as a reference point.

1.3 Objectives of the Study This study is on the impact of working capital management policies on firm performance or profitability. The study seeks to accomplish the following objectives: i. To determine the impact of accounts receivable policy on profitability of Dangote Cement Plc, Benue Plant. ii. To ascertain the impact of inventory period policy on profitability of Dangote Cement Plc, Benue Plant. iii. To investigate the impact of cash conversion cycle on profitability of Dangote Cement Plc, Benue Plant. 1.4 Research Questions Current assets are volatile. It, therefore means holding more than enough of it is not cost effective and holding less than required means the firm may not

be able to meet its current obligations when necessary. This put the company in a dangerous situation and affects the value of its stock. This study seeks to answer the following questions: i. Does account receivable policy have any significant impact on profitability of Dangote Cement Company Plc, Benue Plant? ii. Does inventory period policy have any significant impact on profitability of Dangote Cement Company Plc, Benue Plant? iii. Does cash conversion cycle policy have any significant impact on profitability of Dangote Cement Company Plc, Benue Plant? 1.5 Research Hypothesis NullA: Accounts receivables have no significant impact on the profitability of Dangote Cement Plc, Benue Plant. NullA: Inventory period has no significant impact on the profitability of Dangote Cement Plc, Benue Plant. NullA: Cash conversion cycle does not have a significant impact on the profitability of Dangote Cement Plc, Benue Plant.

1.6

Scope of the Study Research into working capital management as the field of accounting is

wide and encompassing. However, this study is limited and covers the working capital management policies of Dangote Cement Company Plc, Benue Plant. The period under investigation is from 2006 to 2010

1.7

Significance of the Study This study on working capital policy and its impact on profitability will

be significant or of importance to the following: i. Student/Researchers: It will be beneficial to students and researchers as it will add to the body of existing materials or knowledge which will open way for further research on related subject matters. ii. This work will also be useful to policy formulators such as company mangers, as to the optimum working capital policy to adopt so as to bring about effective working capital management and enhance profitability.

1.8 Structure of the Study This research work is structured into five chapters, including the introductory chapter which is chapter one. Chapter one; covers the background to the study, the statement of the problem, the objectives of the study, the research questions, research hypotheses, scope of the study, significance of the study and the structure of the study. Chapter two; reviews the literature related to the subject matter. It covers the introduction, theoretical or conceptual framework, review of prior studies and chapter summary. Chapter three; which is on research methodology, covers research design population and sample, definition of variables employed, types and sources of

data, instruments of data collection, techniques of data processing and analysis, declaration of known problems with design, and chapter summary. Chapter four; presents data analysis and result; It covers data presentation, analysis, discussion and interpretation of results, and chapter summary. Chapter five; is on summary, conclusions and recommendations; It covers the summary of the project, conclusions, recommendations, limitations of the study and suggestions for further research.

PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).

HOW TO RECEIVE PROJECT MATERIAL(S)

After paying the appropriate amount (#3500) into our bank Account below, send the following information to 08064034407: (1) Your project topics (2) Email Address (3) Payment Name (4) Teller Number We will send your material(s) immediately we receive bank alert

BANK ACCOUNTS
MAIN BANK ACCOUNT Account Name: ONOWA SIMON O. Account Number: 3181087193 Bank: ECO Bank.

HOW TO IDENTIFY SCAM/FRAUD

As a result of fraud in Nigeria, people dont believe there are good online businesses in Nigeria.

But on this site, we have provided table of content and chapter one of all our project topics and materials in order to convince you that we have the complete materials. Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank. No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner. CAUTION/WARNING
Please, DO NOT COPY any of our materials on this website WORD-TOWORD. These materials are to assist, direct you during your project. Study the materials carefully and use the information in them to develop your own new copy. Copying these materials word-to-word is CHEATING/ ILLEGAL because it affects Educational standard, and we will not be held responsible for it. If you must copy word-to-word please do not order/buy. That you ordered this material shows you have agreed not to copy wordto-word.