LIQUIDITY MANAGEMENT IN THE SERVICE INDUSTRIES

ABSTRACT: The significance of the service industries in the economic development of Nigeria cannot be undermined. However, liquidity problems constitute a major constraint on the development of this industry. This study addresses the practical measures in the service industries needs to adopt and effectively manage their liquid resources especially taking cognizance of the current economic recession in the country. This study shows that economic recession and over investment in stock are the major causes of liquidity problems in the service industries. The researcher discovered that the firms in the service industries have adopted several measures in an attempt to solve the problem. The basis of recommendation is a more efficient liquid management practice as well as the need for the government to revert the distress economy. The recommendation outlined in Chapter three, if meticulously implemented, will ease the liquidity problem of service industry.

TABLE OF CONTENTS

CHAPTER ONE

1. INTRODUCTION                                                                  1
2. STATEMENT OF THE PROBLEM                                     2
3. OBJECTIVES OF THE STUDY                                          3
4. SIGNIFICANCE OF THE STUDY                              3
5. DELIMITATION, SCOPE AND LIMITATIONS                   4
6. DEFINITION OF TERMS                                            5

CHAPTER TWO

1. REVIEW OF RELATED LITERATURE                     7

2.1    THE CONCEPT OF LIQUIDITY                                7

1. LIQUIDITY VS PROFITABILITY                                8
2. ENHANCING LIQUIDITY THROUGH

EFFICIENT MANAGEMENT OF CASH AND MARKETABLE SECURITIES.                                                               9

1. ENHANCING LIQUIDITY THROUGH EFFICIENT RECEIVABLE MANAGEMENT                                                                   11
2. ENHANCING LIQUIDITY THROUGH EFFICIENT INVENTORY MANAGEMENT                                                                   14
3. LIQUIDITY CIRCULATION FLOW SPEED’S           16

CHAPTER THREE

1. FINDINGS, RECOMMENDATIONS AND CONCLUSION19

3.1    DISCUSSION OF FINDINGS                                              19

1. CONCLUSION                                                             19
2. BIBLIOGRAPHY                                                                   21

CHAPTER ONE

Liquidity has been given different definitions by different authors. Most definitions revolve around the fact that liquidity is the ability to convert assets into cash or obtain cash required. Hornby et al (1982) defined liquidity as the state of being able to raise funds easily by selling assets. “Hidmarch (1981) regards liquidity as closely related to solvency. Researchers view liquidity as the availability of cash resources required to meet the obligation of an organization as they take due.