WORKING CAPITAL MANAGEMENT AND PROFITABILITY IN CHEMICAL AND PAINT SECTOR IN NIGERIA

TABLE OF CONTENTS
TITLE PAGE
CERTIFICATION
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
TABLE OF CONTENTS

CHAPTER ONE: INTRODUCTION
1.1:      Background to the Study
1.2:      Statement of the Problem
1.3       Objective of the Study
1.4:      Research Question
1.5:      Research Hypotheses
1.6:      Scope of the Research
1.7:      Significant of the Study
            References

CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1:      CONCEPTUAL FRAME WORK
2.1.1:   Definition and Concept of Working Capital
2.1.2:   Working Capital Cycle
2.1.3:   Working Capital Policy
2.1.4:   Factor Influencing Working Capital Requirement
2.1.5:   Rationale for Working Capital
2.1.6:   Working Capital and Liquidity
2.1.7:   Rationale for Working Capital Management
2.2: THEORITICAL FRAME WORK
2.2.1:  Theory of Working Capital Management
2.2.2:  Impact of WCM on Company Profitability (Theoretical Base)
2.2.3: Measuring Working Capital Management (WCM)
2.3:      Empirical Review
2.4:      Summary Review
2.4.1:   Major Trend (Consensus on Argument)
2.4.2:   Critic of Literature
2.4.3:   Research’s Personal Contribution
            References

CHAPTER THREE: RESEARCH METHODOLOGY
3.1:      Research Design
3.2:      Nature and Source of Data
3.3:      Population and Sample size
3.4       Explanation of the Variables
3.5:      Specification of Models
3.6:      Techniques of Analysis
            References

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1       Data Presentation and Analysis
4.2:      The Overall Analysis of Descriptive Statistics
4.3 Test of Hypothesis
4.3.1 Test of Hypothesis one
4.3.2 Test of Hypothesis two
4.3.3 Test of Hypothesis Three
4.3.4 Test of Hypothesis Four
4.4       Implication of the Results
4.5       Comparison of the Findings with the objective of the study
4.5.1 Research Objective One
4.5.2 Research Objective Two
4.5.3 Research Objective Three
4.5.4 Research Objective Four
References

CHAPTER FIVE: SUMMARY OF FINDING, CONCLUSION AND COMMENDATION
5.1       Summary of Findings
5.2       Conclusion
5.3       Recommendation
5.4       Area of further study
5.5       Contribution to Knowledge
            References
Bibliography
APPENDIX


ABSTRACT
Working Capital Management plays an important role in financial decision making since it is a part of investment in assets and liabilities and it directly affects the profitability and liquidity of the firm. Firms can achieve optimal management of working capital by making the trade – off between profitability and liquidity. Cash Conversion Cycle is one of the important measuring tools to calculate the efficiency of working capital management. The study tries to investigate the impact of working capital management on profitability of the selected Chemical and Paint firms listed in Nigeria Stock Exchange, using a sampled of 5 firms for the period of 14 years from 2000-2013 , we had studied the effect of different variables of working capital management including the average collection period, inventory conversion period, average payment period cash conversion period and control for current ratio, debt ratio, size of the firm and financial assets to total assets ratio on the profitability measured by gross operating profitability of listed chemical and paint firms. The data is analyzed using descriptive and multiple regressions and the outcome shows that ACP had a positive and significant impact on the profitability, implied that firms can increase profitability measured by gross operating profit by lengthening collection period of account receivable as generous trade credit policy may lead to higher sales. A financial asset to total assets as a control variable has a significant positive relationship with firm’s value and profitability of firms. This means, increasing in the level of financial assets to total assets will lead to increase in the profitability of the firm and the value of the firm, since they are brought for profitability purposes.


CHAPTER ONE
INTRODUCTION
1.1              BACKGROUND TO THE STUDY
The main objective of any business organization is to maximize the profit. But preserving liquidity of the firm is also an important objective too. A firm that did not make profit cannot survive in business for a long time and also firm with insufficient liquidity will be insolvent in a long-run which will disrupt the operational activities of the firm. In order words, effective and efficient management of profitability and liquidity are very important for firms’ survival.

The management of working capital has a significant effect on firm’s profitability and liquidity, irrespective of the nature and the size of the business. The management of working capital involves the determination of optimum level of working capital to keep, monitoring and controlling the level of individual component of working capital to ensure that the optimum level is not exceeded, and provision of funds to finance current assets (Nwude, 2004:628).Popularly known as trade-off between profitability and liquidity. Therefore the importance of working capital management cannot be over-emphasized. It is obviously critical for smooth operation of the firm, because it affects the profitability and liquidity of the firm.

Working capital components (i e. account receivable period, account payable period, inventory period etc.) have implication for profitability among other variables. Hence, determining the amount of liquidity available for day to day business activities and as Nwude (2004) as posits:

Working Capital is one of the most strategic assets holding of the firms. It is a Circulating capital which flows and changes form as the firm pursues its goals and performs its operation. It is a financial lubricant or life stream for the firm and maintains constant process of circulation throughout the firm (Nwude, 2004:627).

Raheman & Nasr (2012) is of the view that if working capital management is not correct the sales and consequently the profit of the company might decrease and the company may be unable to pay its debt and commitment on time. However, the need for maintaining an adequate working capital can hardly be questioned. Just as the circulation of the blood is very important in human body to maintain life, the flow of fund is very necessary to maintain the business (Ebenezer & Asied, 2013). How profitable or non-profitable a business or a firm can be partly.....

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Item Type: Postgraduate Material  |  Attribute: 103 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.
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