APPRAISAL OF FINANCIAL MANAGEMENT PRACTICES IN A MANUFACTURING INDUSTRY. (A CASE STUDY OF EAGLE CEMENT COMPANY PLC. NKALAGU)
Finance is the life-wire of any organization and proper management
means a sustained increase in the life of an organization. Owing to the
broad view of this project when settled for an elaborate detail about
it, this report or write up has been divided into five different
chapters as follows:
Chapter One: which is the introduction,
deliberates or the introduction of the topics as regards the background,
objectives scope and significance of the study, the statement of
problems, research questions and hypothesis of the project.
Two: elaborates on the literature review as in the evaluating financial
performance, accounting system, accounting procedure and internal
Chapter Three: deals with the research methodology as in
research design, area of study, population of study, sample and
sampling procedures, instrument for data collection, validation of the
instrument, reliability of the instrument, method of data collection or
administration of instrument and method of data analysis.
Chapter Four: deals with the data presentation and analysis test of hypothesis and summary of result.
Five: presents and gives discussion, implication and recommendation as
in discussion of result, conclusion, implication of the results,
recommendations, suggestions for the further research and limitation of
Table of Content
Table of contents
1.1. Background of study
1.2. Objectives of study
1.3. Statement of problems
1.4. Scope of study
1.5. Research questions
1.7. Significance of study
2.0 Review of literature
2.1. Evaluating financial performance of a company
2.2. Accounting systems
2.3. Accounting procedures
2.4. Internal control systems in accounting procedures
3.0 Research methodology
3.1 Research design
1.2 Area of study
1.3 Population of study
1.4 Sample and sampling procedures
1.5 Instrument for data collection
1.6 Validation of the instrument
1.7 Reliability of the instrument
1.8 Method of data collection or administration of instrument
1.9 Method of data analysis
4.0 Date presentation and analysis
4.1 Test of hypothesis
4.2 Summary of results
5.0 Discussion, implication, recommendation
5.1 Discussion of result
5.3 Implication of the result
5.5 suggestions for further research
5.6 limitation of the study
Almost all kinds of business activities directly or indirectly
involve the acquisition and use of funds. There exists an inseparable
relationship between finance on the hard and production and other
functions on the other. In a business set up, the functions of
recruitment and promotion of employees are clearly the work of the
Sales promotion policies come within the
functions of the marketing department. These activities performed by
these departments (personnel and marketing departments) require outlay
of funds and therefore affect resources. The finance function of raising
and using money although has a significant effect on other functions
but it need not necessary limited the general running of the business.
Generally firms formulate their policies (marketing productions,
personnel and other policies) most of the time, to tally with the
financial resources of the company available to them.
The word “Finance” is viewed from different perspective by different group thus: -
a. A layman sees finance as the volume of money in h-is prose, vault and at the bank.
Investors sees finance as the provision of funds as at the time it is
need for investment. It goes beyond coursing and applying the fund for
profit maximization as well as the state of sharing the profits.
c. Academic sees finance as the science of fund management.
investor view about finance shall be upheld in this write up. This
because it emphasizes on profit making for the maximization of
shareholders wealth. Wealth maximization is one of the corporate
financial objectives of a firms. This can only be achieved by efficient
and effective management of the company’s resources.
management involves all the activities that are concerned with planning
cash and credit requirement, including the effective control of the
The activities could be segregated as follows
i. Forecasting the future availability of and requirements of cash
ii. Converting forecasts into plans and budgets
iii. Planning the appropriate capita structure
iv. Raising of cash from outside the business
v. Controlling cash balances and flows in accordance with plans and changing circumstances
vi. Investing surplus fund
In financial planning, this involves estimating and
of the future flow of cash receipt and disbursements. Also this is
useful in raising of funds organizing and ensuring that funds necessary
for carrying on the operation of planning is available. The wise use of
funds by allocating such funds ensuring efficient use of funds.
In financial controlling, monitoring financial operations to ensure that cash flows are proceeding according to plan.
a company is part of financial community, its financial management can
be fully interpreted only within the context created by the workings of
financial institutions and markers.
The variables considered in the framework of financial management are:
a. The financial goals of the company
b. The valuation of the company and the extent to which this valuations uninfluenced by company decision.
The means of measuring the performance of the company. When it goals
have been identified and the method of valuation chosen, the company’s
performance must be monitored and measured accordingly.
The researcher here wants to access the financial health of
manufacturing industry, its strengths, weaknesses, recent performances,
future prospects and the implementation of its financial policies. This
involves a review of the financial policies.
This involves a review
of financial statements followed by careful consideration of their use
in evaluating financial performance.
ASSESSING THE FINANCIAL HEALTH OF A
most important source of information for evaluating the financial
health of a company is its financial statement consisting of a balance
sheet and a income statements. EAGLE CEMENT is a public liability
company and as required by law, it is expected to submit her annual
account to the registrar, corporate affairs commission, Abuja. The
account so prepared is for the consumption of many interest group like:
the shareholders, tax authorities, investors, creditors etc.
purpose of evaluating the financial health of the company (EAGLE
CEMENT), the use of financial statement for 1999 year shall be reviewed
and analyzed. See chapter four on data presentation and analysis.
1.1 BACKGROUND OF STUDY
research work is based on the NIGERIAN CEMENT Company Plc. Nkalagu in
Ebonyi State. As miller puts it, “we cannot understand the attitude of
either management of workers unless they are seen in their historical
context”. Here the history of NIGERCEM Nkalagu is briefly narrated and
derived from the management audit enquiry of NIGERCEM, 1976.
history of NIGERCEM dates back to colonial days in Nigeria. I the early
thirties of this century, several district officers, geologists had
report tot he existence of large deposits of limestone in Nkalagu area –
various over sees had as a result of this shown interest in working of
On 23rd August, 1954, the Nigerian government signed an
agreement with F. L Smith and company for the erection of a cement works
at Nkalagu. By the same agreement, F. L. Smith and company limited as
managing agents. The Nigerian Cement Company Limited, Nkalagu was
incorporated on 13th Novemenber 1954 to operate this cement project. Mr.
E. E. Sabben – Clare became the first chairman of the board of
On December 20, 1957, the governor general of Nigeria,
Sir, James Robertson, opened the factory officially. Commercial
production commenced on 1st January, 1958.
Once of such investors is
flour mills of Nigeria which Chief Emmanuel Ukpabi said arrears of staff
salaries alone in Nigrecem in conservatively put at N1.4billion
according to him. Liabilities to individuals and corporate bodies are
estimated at several billions of naira. He recalls that there had been
desperate move by cement importing companies to either buy wholly or
acquire majority shares of ailing cement manufacturing firms. But they
all shunned Nigercem because of the said liabilities.
by the five south-eastern states ran into hitches from the late 80’s due
mainly to gross mismanagement. The development led to break down of
three of firms vital machines which remained unserviceable with the only
functional one operating at low capacity for some time until it finally
got grounded. The south-east governors who are the major investors in
the company had also contemplated many options aimed at reviving the
At recent meeting of the five south-eastern governors in
Owerri the Imo State capital, various options for the revival of
Nigercem topped the agenda of their parley. The host governors Achike
Udenwa who spoke with news men said Nigercem will be privatized if the
governor’s ratify is being considered for privatization. The government
of the five eastern states are already considering this in order to
improve efficiency and productively.
The chairman of Nigercem “Nze
Clement Maduako noted that eastern Rukeem company limited producers of
Eagle Cement, was the major shareholder in the privated Nigercem with a
controlling share of 60 percent. Expressing confidence on the ability of
new management to kick-start Nigercem now called Eagle Cement again, he
said the new board has the first general manager of the cement company
as member, while another employee of the company is expected to join the
six-member board. Member of board, who emerged from the election
conducted by the 165 shareholder in attendance were Nze Maduako,
chairman; captain I.A Hastrup, Mr. H.N Onugbogu, Mr. Coran Wejdmark, Mr.
S.A Oludemi and Dr. J.O Ojukwu.
The plant stopped production in
1999, but had a text run in 2001 for only three months in preparation
for the privatization. Some of shareholders who spoke said they had not
been paid for the past 40 months and pleaded with the new board to
consider clearing the arrears then works commences in the factory.
1.2 OBJECTIVE OF THE STUDY
overall purpose of the study is to understand the financial management
practices that equips them with the conceptual and analytical knowledge
requires to make skillful, informed, sound, objective and reliable
decision of the company. Specifically the objective of the study on this
project is stated as follows:
a. To evaluate the financial performance of EAGLE CEMENT Company.
b. To evaluate the management levels of control of financial performance of the company.
To identify the accounting systems and procedures and check whether the
financial polices of the company are implemented accordingly.
d. To prefer solution to ineffectiveness in financial management of the company.
1.3 STATEMENT OF THE PROBLE
a. It is believed from the evaluation of financial status of the company that the company is not financially healthy.
b. It is also established that there is inefficient and ineffective management of the company’s resources
c. It equally discovered that the financial policies are not properly implemented.
d. Exposing financial fraud noticed. It include as follows:
i. Cash advance
and management do apply for cash advance but over spend the amount
approved for them only to come back to claim a very huge amount as their
ii. Car repairs:
Outside, manager do not allow their
official cars to be repaired by the company’s employed mechanics. They
prefer repairing it outside only to present an inflated biill to the
iii. The provision that all purchases should be routed through the purchasing department is just in principle not in practice.
iv. Price invoicing:
The company allows suppliers to inflect the prices of their suppliers because of the interest some of them have.
v. price variation:
supplier do after some months of supply sent a price increase to the
company for items already supplied and the company will honour such
vi. Supply of item, which do not agree with the specification of item actually required by the company.
vii. Contract prices are unjustifiable inflated
viii. Cheque exchange granted to some staff or managers take more than one year before it is redeemed.
1.4 SCOPE OF STUDY
study covers the area relating to financial manger of EAGEL CEMENT. It
also touched on the effective implementation of financial policies of
1.5 RESEARCH QUESTIONS
i. What are the levels of the financial management control of the company?
ii. What are your accounting system and procedures relating tot he receipt and disbursements of the company money?
i. Financial management practices EAGLE CEMENT COMPANY are not in line with the approved policy
ii. The accounting procedures are not in line with the approved policy
iii. The internal control system of the company are not in line with the establishment system.
1.7 THE SIGNIFICANCE OF THE STUDY
1. The study will reveal the ineffectiveness of financial management practices in the company
2. The study will equally reveal the weaknesses in the internal control system of the company
3. The study will also over haul the accounting procedures of the company as to see how adequate they are.