WORK CAPITAL MANAGEMENT AS A TOOL FOR COST MINIMIZATION AND PROFIT MAXIMIZATION

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ABSTRACT
The target of this analysis work accommodates working capital administration as a device for minimization and revenue maximization with specific reference to Anambra motor manufacturing firm, Enugu. The analysis design used was the survey methodology and the sources of information have been each main and secondary. The first sources have been interviews granted to me whereas the secondary sources of information have been obtained from associated literatures viz textual content books, web, journals by totally different authors. Main sources have been from interviews and questionnaires. The info, Hypotheses have been examined utilizing chi-square. From the researchers findings, it’s seen that profitability of a agency rely on the extent of its working capital administration. Though working capital administration is creating issues in at present’s enterprise setting as a result of world developments of science and utilized in enterprise however ANAMMCO tries right here finest and maintained her liquidity place. The researcher would advocate that seminars and workshops be organized for the employees and administration of the corporate on the impact and deserves of efficient and environment friendly working capital administration.

CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Capital might be categorized into two broad classes based mostly on tenure viz. long run and quick time period capital.
The long run capital of companies is dedicated to funding in mounted belongings. It contains shareholders’ funds and long run loans. Then again, quick time period capital is utilized for funding in present belongings reminiscent of money, marketable securities and short- time period credit. Present belongings are normally acquired fairly often in various portions relying on the demand construction for the agency’s product. Every time a call to amass present belongings is taken, finance turns into inevitable.
Nonetheless, it doesn’t essentially imply that money must be paid every time an order for recurrent manufacturing enter is positioned, quite it implies that identical to within the case of mounted belongings, each determination on present belongings has monetary implications. As an illustration, a agency has
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to resolve how a lot of the fabric used for manufacturing of products and providers are to be on credit score or on money and carry foundation. it additionally has to find out what quantity of its sale must be on credit score. Additionally each the optimum and minimal inventory ranges for uncooked supplies and work-in-progress (WIP) should be decided and maintained at a given time limit.
Orjih (2001:85) refers to working capital as a agency’s funding in brief –time period belongings money, marketable securities, commerce debtors and inventory, much less present liabilities used to finance the present belongings. He acknowledged that working capital administration due to this fact means the planning and controlling of each present asset and present liabilities. It entails the administration of money receivables, inventories, marketable securities and the present liabilities.
He additionally mentioned the 2 points of working capitals the “gross working capital: Because of this the agency’s funding in present belongings. Present belongings are these which might be transformed in to money inside an accounting yr and so they
Embody money, quick time period securities, and debtor’s payments receivable and inventory. Internet working capital- this refers back to the distinction between
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present belongings and present liabilities. Present liabilities are these of outdoor is that are anticipated to mature for fee inside an accounting yr.Internet working capital might be constructive or damaging. It’s constructive when present belongings exceed present liabilities and damaging when present liabilities exceed present belongings.
Davidson (1984:401) outlined “working capital as “present belongings much less present legal responsibility”. He additionally outlined it as “circulating capital”.
Weston &Brigham (1977:142) outlined working capital administration as “administration determination on the quantity of capital invested in numerous present belongings and the way this funding is to be financed”. It’s elementary and of nice significance to a enterprise because it allows the group conduct its actions from free monetary embarrassment.
Working capital administration additionally aids the administration to keep away from the losses consequent upon incurring commitments under or above its capability in strange course of enterprise.
Retrof (1982:249) stated {that a} agency ought to all the time keep a sound working capital place for it to have sufficient to run its
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enterprise actions. Each extreme in addition to insufficient working capital place are harmful from agency’s view level.
Extreme working capital means idle fund which implies no revenue for the agency, whereas insufficient working capital renders the agency unable to avail enticing credit score alternatives and drastic discount within the fee of return on whole funding. The agency losses its popularity and capital base might be eroded, there by affecting the organizations credit score worthiness.
Simply as blood is life wire of any human being, the working capital of any firm is the pivot round which its day-to-day operations revolve. it cuts throughout all departments and features of a corporation to the extent that every one the organizational actions would floor to a halt of the working capital weren’t correctly managed.
Subsequently, the necessity for a sound and sensible working capital coverage for a producing from like Anambra Motor Manufacturing Firm (ANAMMCO) turns into crucial
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A BRIEF HISTORY OF ANAMMCO
The Anambra motor manufacturing firm (ANAMMCO) was integrated in 1977 as a personal restricted legal responsibility firm. It was established consistent with a three way partnership settlement which the federal government entered with Daimler Benz Ag of Germany, now Daimler chyler AG (DCH) of Germany because the technical companions.

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