ABSTRACT
The topic of liquidity management in
manufacturing industries is the inflow and outflow of liquidity in an
organization to ensure that there is the availability of funds to meet up the
firms’ short term financial obligations. Because of the need for increasing
efficiency in liquidity management especially in this period of a high
inflation rate that threatens the value of any ideal liquidity. Liquidity is an
important current asset for the operation of the business. The purpose of
liquidity management in manufacturing industries is to find out whether
formulized liquidity management systems exist in manufacturing industries
particularly in Nigerian Breweries Limited 9th Mile corner. This liquidity
management implies that activities do not auger well for the overall well being
of Nigerian Brewery. In chapter one, the study has been devoted to the
introductory part of the topic which deals with the over-view of liquidity
management, the nature and definition of cash management. Chapter two the
research review the related literature on liquidity management as it concerns
manufacturing industries. Chapter three is the research design and methodology,
area, population, sampling of study. Chapter four deals with data analysis and
testing. Chapter five deals with findings, implications and conclusion.
TABLE OF CONTENTS
Title page – –
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– – i
Approval – –
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ii
Dedication – –
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Acknowledgement –
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– iv
Abstract – –
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v
Table of contents –
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– vi
CHAPTER ONE
Introduction
1.1 Background of the study – –
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– 1
1.2 Statement of the problem –
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– 3
1.3 Objective of the study –
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– – 4
1.4 Significant of the study – –
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– 4
1.5 Research questions- –
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– – 5
1.6 Research hypothesis –
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– – 6
1.7 Scope of the study – –
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– – 7
1.8 Limitation of the study- –
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– 8
1.9 Dentition of Term –
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8
CHAPTER TWO
2.0
Related literature at the end of literature Review –
10
2.1
Strategies for cash management
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– 18
2.2
Objective of cash management
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– 20
2.3
Importance of cash management –
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21
2.4
Motive for holding cash –
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– – 23
2.5
Specific advantages of adequate cash
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27
2.6
Cash planning- – –
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– – 28
2.7
Cash forecasting and budgeting
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– 30
2.8
Managing the cash flows-
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– – 37
2.9 Management
Techniques – – –
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37
2.10 Cash Balance – –
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38
2.11 Determining the Cash Balance –
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– 39
CHAPTER THREE
3.0
Research Design – –
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– – 41
3.1
Area of study – – –
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– – 41
3.2
Population of the study –
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– – 41
3.3
Sample Method – – –
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– – 42
3.4
Research Instrument – –
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– – 43
3.5
Validation of the research instrument
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44
3.6
Sources of data – – –
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– – 46
3.7
Method of data Analysis –
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47
3.8
Sample size determination
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– – 47
CHAPTER FOUR
4.0
Data presentation and analysis
– –
– – 49
4.1
Analysis of Data using the simple percentage –
– 51
4.2
Test of Hypothesis – — –
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– – 66
CHAPTER FIVE
5.0
Discussion and conclusion of results
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79
5.1
Discussion of findings – –
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– 79
5.2
Conclusion – –
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83
5.3
Recommendation – –
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– – 86
5.4
Suggestion for further study –
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– – 90
5.5
Limitation of the study —
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– – 91
Bibliography — –
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92
Appendix A
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– – 93
Appendix B
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– – 94
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Liquidity management is the basic input
needed to keep the business running continuously. it is also the ultimate
output expected to be realized by selling the service or product manufactured
by the firm. The firm should keep sufficient cash neither more nor less,
shortage will disrupt the firm manufacturing operation, While excessive idle
without contributing anything towards the firm’s profitability.
Liquidity management involves initially, the
provision of sufficient cash to meet the organization’s obligations, this
project aims to explain in simple and clear language what management must do to
have effective control over its most liquidly and important asset cash. Thus a
major assignment of the financial manager is to maintain a sound cash position.
Effective management and control of cash are very important to the firm because
cash represents instantly available purchasing power and nearly every
transaction ultimately involved the exchange of cash.
An integral part of cash administration is
concerned with the effective utilization of corporate funds. The planning and
control of these activities are made necessary by the fact that business is
cyclical and a considerable amount of time, during which raw material must be
purchased and wages and overhead paid collapse between the receipt of order its
shipment and banking of cash. An investment in cash assets is required to meet
the company’s operational need, the uneven flow in the receipt and disbursement
of funds, seasonal fluctuations and so on. Moreover, the receipt and
disbursement of funds vary daily and within the month, with a heavy cash
receipt accruing at a particular time. Sophisticated cash management models
recognize the uncertainty inherent in forecasting both cash inflows and
outflows.
1.2 STATEMENT OF THE PROBLEMS
The liquidity constitution is a substantial
part of the current assets of many companies, particularly in Nigeria.
Effective cash management is necessary for the overall performance of the
organization, one is surprised at the complete lack of formalized cash
management systems in many organizations in Nigeria. While some companies
prepare a cash budget at the beginning of the financial year. Without any
follow up control process, others just have cash. Management to the monthly
bank reconciliation statements, which are often prepared in arrears,
unfortunately, it is only when a cash problem arises that the management starts
to look for a solution.
1.3 OBJECTIVES OF THE STUDY
In every business organization, effective
liquidity management plays a vital role in assisting the business to attain
certain goals. Among this basic purposes of the study are;
a) To
determine the part which effective liquidity management plays in organizations
in attaining their objectives.
b) To verify from practising accountants and
financial executives the consequences of not having effective liquidity
management in a manufacturing organization.
c) To relate how effective liquidity
management can assist businesses to attain their predetermine profitability by
increasing net returns on asset investment.
d) To determine whether inefficient liquidity
management has any impact on manufacturing investment.
e) To ascertain how a company can optimize
liquidity position by adequate cash management.