Background of the study
The advent of asset management is a prerequisite to
organizational profitability and growth. The management of asset in
public limited liability companies has a lot to do with their
profitability and so extra caution has to be taken in the management
appraisal of these assets to ensure evenness and profitability (Allen
Current assets as one of the management tolls of business
organization are very important in the proper function of business and
achievement of profitability of an organization. Current assets are
those assets that are readily without depreciation in value and
interference in the normal process of the enterprise. Management on
the other hand involves getting things done either by oneself or through
other people by planning, organizing and coordinating (Reid 2003). It
is also a social and technical proves that utilizes resources and
changes human behaviors in the desired direction in order to elicit
contribution that will accomplish the objectives of the organization.
Current asset management includes – managerial decisions on how
the various component of current asset are to be financial as well as
planned policies on the composition level to be maintained and control
to be exercised(Bond 1998). Current assets comprises of cash,
inventories, governments bonds, account reachable mark able securities,
prepaid expenses and also other assets that are capable of being
converted into cash within a relatively short period without
interfering with the normal operations of the business. For an
organizational goal to be achieved these components of current assets
should be efficiently managed.
But sundry debtors and cash tie-up investment funds can also have
other costly disadvantages, for this reason, organizations should
always seek to minimize or keep optimum stock and cash level of these
assets and ideally reduce them to zero. However, reducing them to zero
is rarely practical since to do so will result in cash greater of other
adverse costs increased. The determination of the optional level for
such assets is therefore the result of balancing process between the
cost of holding such assets and role associated with not holding than
or of holding only small amount.
It is obvious that any mismanagement of these current assets
will result to loss of cash, which will eventually have adverse effects
in the entire management of the company(Caridad 2005).
Therefore, any step which can be taken to minimize levels of
current assets probably yield large savings in cost. Investigations
have shown that many business concerns fail or perform below
expectations as a result of the inability to manage their current
assets adequately (Bavin 1999). The importance ofwell-coordinated
current assets, management cannot be over-exaggerated; it goes a long
way to boast productivity, availability of funds, profitability and
encourages growth and expansion of the company. The researcher
therefore tend to investigate and be able to come out with a profitable
result on effective and efficient management of current assets in
public limited liability companies and suggest possible ways for
Statement of the general problem
Most companies in Nigeria have had inconsistent and abysmal
performance as a result of their inability to manage their current
asset; this and a host of other inconsistencies may have led to the
economic instability of Nigeria.
The rise in the wave of corruption which has crippled the socio
economic development of Nigeria may actually be as a result of lack of
efficient current asset management in public organizations, lack of
adequate appraisals of an organization’s current asset could lead to
lapse which could encourage fraud thereby affecting the profitability
and growth of the organization.
Another difficulty encountered in management of current asset is
debt managements of current asset is the problem of debt management
both on the part of government and at the organizational level. The
terms of credit, sales is no more maintained by distributors and this
cases shortage of fund that would have this cause shortage of fund that
would have been available for the normal operation of the origination.
This entire problem hinders the efficient management of current
Significance of the study
A cardinal significance of this study would be to serve as an eye
opener for captains of industries, project managers, researchers and
all stakeholders on the need to ensure a critical appraisal of current
asset management in public organizations.
This study would also be of immense importance to government in
the formulation of economic policies and internal revenue template for
sustainable socio economic development.
Aims and Objectives of the study
The study aims to achieve the following;
- The purpose of this study is to critically appraise the level
at which the management makes policies for current assets
administration in public limited labiality companies.
- To as certain how funds are really being civilized and
adequate management of current assets with a view to finding solution
to gross mismanagement in Nigeria.
- To identify reason why public limited liability companies engage in proper current asset management.
- To examine the extent to which current assets management tools
have helped in the proper functioning of business and achievement of
organizational goals and objectives.
- To identify the benefits of current asset management to the Nigerian economy by extension.
- To make recommendations and to prevent further lapses and
recommend appropriate measures to be adopted in efficient current asset
management in other to minimize waste.
Scope of the study
This study is restricted to the critical appraisal of current
asset management in public limited liability companies with the
Nigerian breweries plc as its case study.
Limitation of the study
Financial constraint- Insufficient fund tends to
impede the efficiency of the researcher in sourcing for the relevant
materials, literature or information and in the process of data
collection (internet, questionnaire and interview).
Time constraint- The researcher will
simultaneously engage in this study with other academic work. This
consequently will cut down on the time devoted for the research work.
This study would be guided by the following research questions
- Does the current asset management system in organizations helped to improve business growth and profitability?
- Has current management in public limited liability companies helped to reduce fraud and corruption in the system?
- Has the level of current asset management in public limited liability companies influenced the economy of the Nigeria?
- Has the government taken current asset management serious in
the ministries, department and agencies (MDA) to minimize to waste?
H0: there is no significant impact of current asset management on
the profitability and growth of public limited liability companies
H1: there is a significant impact of current asset management on
the profitability and growth of public limited liability companies.
Definition of terms
- Asset:An item of property owned by a person
or company, regarded as having value and available to meet debts,
commitments, or legacies.
- Current asset: A balance sheet account that
represents the value of all assets that can reasonably expected to be
converted into cash within one year. Current assets include cash and
cash equivalents, accounts receivable, inventory, marketable
securities, prepaid expenses and other liquid assets that can be
readily converted to cash.
- Organization:An organized group of people with a particular purpose, such as a business or government department.
- Government bonds:A government bond is
a bond issued by a national government, generally with a promise to pay
periodic interest payments and to repay the face value on the maturity
date.Government bonds are usually denominated in the country's own
ABS, 2002. Implementation of accrual accounting in Australian
government finance statistics and the national accounts. OECD Meeting
of National accounts experts, Paris, 8-11 October.
Allen, R. and Radev, D., 2007. “Managing and Controlling Extrabudgetary Funds”. OECD Journal on Budgeting, 6 (4), 1-30.
Athukorala, S. L. and Reid, B., 2003. “Chapter 4: DMC Government
Accounting” in Accrual Budgeting and Accounting in Government and its
Relevance for Developing Member Countries. Manila: ADB, 29-37.
Available from: [http://www.adb.org/Documents/
Awty, A., 2003. Mean, lean reform. Australia, Australian Society
of Practising Accountants [online]. Available from:
Azuma, N., 2002. “The Role of the Supreme Audit Institution in NPM: International Trend”. Government Auditing Review, 10.
Ball, I. [et al.], 1999. “Reforming Financial Management in the
Public Sector”.Policy Study, No. 258 – part 3. Reason Public Policy
Barret, P., 2004. “Financial Management in the Public Sector – How
Accrual Accounting and Budgeting enhances Governance and
Accountability”. CPA Forum: Challenge of change: Driving governance and
Bavin, T., 1999.Cadastre 2014 Reforms in New Zealand.“New Zealand
Institute of Surveyors & FIG Commission VII Conference & AGM.
Bay of Islands, 9-15th October.