Full Project – The impact of working capital management on organization performance

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CHAPTER ONE

1.0 INTRODUCTION

Working capitals serve as backbone of every organization both private and public establishment sustainability of the operation of the organization

Working capital by definition is the relationship that exists between current by definition over current abilities. The administration working capital ensure guarantee the perpetual existence of the business so the study of the working capital management is very significant.

The impact of effective working capital management becomes a viable area of the study because most of the organization handle the said topic with the levity forgetting that working capital determine the major thing that with this study or work different organization, bankers, financial mangers and other users of working capital require ultimate attention in order to ensure the continuity in the organization. To ensure the success of this task different material textbooks, journal and magazine will be consorted to provide deep information about the management of working capital and also to ensure according in the data deep information will be obtain from Kogi State water board Lokoja.

Therefore working capital management is a subject that concern all business organization large and small public and private because where very little efforts are directed towards working capital management it large constitute a negative consequences towards the organization performance.

1.1 BACKGROUND OF THE STUDY

Management is every organization regardless of the types is a powerful engine room, and can be toiled from the bottom to the top, polling accent on the achievement of the organization objective both short and long term objectives. It is an appreciated fact that its operating and also certain hindrances the experience is being brought to light hence the growing need to enhance the performance of management.

In this modern world, private and public enterprises are primarily established to provide goods and services and in terms to make profit. The profit is generated out of the money. Invested and as incorporated business enterprises from the legal point out view is regarded as separate legal personalities which means they can sue and also be sued in there name.

There is also a sating through a legal fiction which affect the human life generally, it will be in line with that analogy to add at this point that working capital is considered as the blood that runs through the vein of legal entity.

As blood is significance to human beings so also working capital is considered important to every business organization in the same managers the life of a business and it continuing existence depend solely on the management of its working capital. Put the most effective machine and qualified personnel in place without the availability of the working capital noting can be achieved and if this is not checkmate it can collapse the business in long run.

Working capital is defined as that portion of a business is mainly consist of current assets an current liabilities is could be referred to as all aspect of administration of current assests and liabilities.

The weight of the working capital in a firm determine the liquidity and profitability of the business organization.

Working capital management is very vital in the survival smooth operation and growths of every organization desire to remain in perpetual existence and to guarantee this effective working management must be put in place. Effective of invertors levels to be kept as well as cash levels to be maintained at any particular point in time. In addition to the above firms make qualitative judgment about it ability to met its current obligation as they arise through the maintenance of a state of balance between current assets and current liabilities is maintained through a reasonable ration between current assets and liabilities.

Working capital management is a subject that concerns all business organization be it large and small and because where very little effort are directed towards working capital management.

The consequence could be horrendous working capital is response to an effect performance.

1.2 STATEMENT OF THE PROBLEM

A special investigation into private sector revealed that the sector is characterized by woeful performance an poor achievement and this to a greater extent impairs the industrial self reliance and industrial development which the nation target at achieving even when it is categorically stated in the reform programmed embanked upon during Obasoajo administration.

Despite the fact that the private sector is continuously being looked upon as the machinery to forge the way for economic development but is still not being achieved terms of their contribution toward economic development.

A review of the factors which are responsible for this unenviable performance of business organization revealed that working capital management in most organization was not very well articulated.

In the same vein a review of the death of most business organization over the years, should that the affected business organization failed to manage properly he liquidity position of the organization.

Business organization borrows money on a short term basic to guarantee on effective are unable to refinance their borrowing as a result of bad liquidity management crisis ensured. More recently the default of several business organization to meet their obligation as they arise and had an impact on the industrial sectors as well as the private sector and the economy as a whole.

1.3 OBJECTIVES OF THE STUDY

The main objectives of this study is to assess the impact of working capital management on organizational performance other objectives are to:

Assess whether working capital management have an impact on water board
Find out whether there are techniques for effective management of working capital in water board.

Assess whether there are factors militating against the effectiveness of working capital management in water board

1.4 RESEARCH HYPOTHESIS

To ensure a more analytical and oriented research work, the statement of hypotheses are:

Ho: That working capital management doe not have an impact on water Board

Hi: That working capital management an impact on water Board

Ho: There are no techniques for effective management of working capital in water Board.

Hi: There are techniques for effective management of working capital in water Board.

Ho: There are no factors militating against the effectiveness of working capital management in water board.

Ho: There are factors militating against the effectiveness of working capital management in water board.

1.5 SIGNIFICANCE OF THE STUDY

Achieving significant result in increasing sustainable organization performance that will guarantee industrial development often

On what is done, how it is done when it is done and the target for which the effort are directed at. It is obvious from several studies adopted by most business organization have failed to achieve importantly the industrial development which the nation is driving towards achieving are for from being achieved. It is therefore required concerted effort by all to contribute all this important but elusive goal within the context of an organization as well as the industry as a whole. Such effort can only be meaningfully if is terms from an business organization to realize the loftily objective or increasing effective organizational performance.

The study is expected to be a general and a directed effort towards identifying articulating and highlighting various strategies of working capital management as adopted by Kogi State Water Board Lokoja. It is also a quest to streaming working capital management strategies toward making the organization more important.

The study is also expected to be of benefit in business organization and industrial developers, such as private sector strategies panniers managers and monitors of industrial development and indeed the general public.

The research is expected to be a part of data for bankers and policy makers in working capital management strategies.

It will also response the interest of student and academic/academicians to conduct further research in this field of study which may lead to more interesting findings.

1.6 SCOPE OF THE STUDY

The research work will be carried out within the frame work as to highlight the significance of an the need for working capital management in the sustenance of effective organization performance which will eventually cover all segment of Kogi State Water board Lojoko.

In this research study, the impact of working capital management as it affect organizational performance will be discussed willing the conflness of adopted by Kogi Kogi State Water board Lokoja with respect to working capital management.

Furthermore with respect to the case study awareness will be credited through the data collected from the selected qualification of personal under study on how working capital management coupled with cash management enhance organization performance.

As will other studies attempting to identify and highlight the relationship between variables and embedded in the research topic constraint experienced in the course of this work were in the following forms.

It appeared as a great constraint to the researcher while respondents showed no co-operation in making relevant information available for the proper execution of this research work.

The researchers have to put more effort by persuading the respondent to provide the necessary information available.

Also monetary resources appeared such at one point or the order in the course of carrying out this research work money is the driving force that propels the execution of quality research work.

Furthermore the non – challent attitude of the respondents and misplacement of questionnaire usually encountered by the research is another constraint to smooth execution of this research work.

Although these problems where experienced one point or the order during the course of the research and sometime appeared to be part of the research work they are in no way reduced the quality of this research.

1.7 LIMITATION AND CONSTRAINT OF THE STUDY

The introductory part of the project contains the background of the study statement of the problem objective of the study, statement of hypothesis, significance of the study scope and limitation of the study definition of key terms an end of chapter reference while the literature review pat contains the introduction an the overview of Kogi State Water board Lokaja and some other features embarked in the working capital management it also shows that the end of the chapter reference.

Furthermore, the research method contain introduction definition of research. Research design area of study population of study sample and sampling techniques instrument for data collection and also method of data analysis.

In the end chapter we have summary of the findings managerial implication of the finding summary of the study. Conclusion and some other concept contained in the concluding chapter.

1.8 DEFINITION OF KEY TERMS

Current Assets: These are assets that are capable of being converted into liquid form, i.e. (cash or it closed e.g. Unralent ) within a twelve months period.
Current liabilities: These are debts that are due to be payable within a twelve months periods.

Working capital: This describes the relationships between current assets and current liabilities. It ordinarily means the execs of current assets over current liabilities.

Liquidity this term relates to how quickly investment can be converted back into cash.
Accruals: Is the recognition of an expense or revenue that has risen but has not yet been received.
Capital Assets:- These are asset with life more than one year.

Solvency:- is the ability of the firm to meet its short terms obligation as at when due.
Ratio: is defined as the indicated quotient of two accounting expression and as the relationship between two or more things.

Cash Budget:- This form an integral part of the master budget. It is a comprehensive plan for cash receipts and payment for future period.
Inventories: These are otherwise referred to as the stock of goods or raw materials that are maintained physically in the state.

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