THE IMPACT OF WORKING CAPITAL MANAGEMENT OF THE PRODUCTIVITY OF A MANUFACTURING COMPANY
CHAPTER ONE
INTERODUCTION
1.1 THE STUDY’S BACKGROUND
Businesses operate in a rapidly changing environment that poses a threat to their survival. Many of them have developed various survival strategies in order to maintain their substance. As a result, this has become the central philosophy of most business concerns.
For a business to survive, it must make a consistent profit in order to grow and meet its obligations when they become due, as well as ensure that the company does not run out of working capital management and its effect on the portability of manufacturing companies.
Its goal is to draw attention to this work, which is concerned with the importance of working capital management and its impact on the profitability of manufacturing companies.
Most manufacturing companies have put in a lot of effort and money. This primary is based on adequate recognition of the importance of maintaining an optimal level of working capital by financial experts, and it also disproves the claim that profitability is more important than working capital management.
Working capital refers to a company’s investment in current assets. Current assets are made up of cash and near items such as debtors, stock, marketable securities, and so on. In other words, they are assets that can be converted into cash immediately or within a short period of time, say one year. The gross working capital is referred to in the preceding description. Net working capital, on the other hand, refers to the total current liabilities.
1.2 THE PROBLEM’S STATEMENT
Working capital management is clearly a global issue, affecting both large and small businesses, and even the government is involved in this major concern.
The issue at hand is identifying the difficulties encountered by a manufacturing company after realizing that profit is made at the expense of running an efficient would be analyzed, the identified problems and useful suggestions offered.
1.3 QUESTIONS FOR RESEARCH
1. Is there a link between working capital management and profit?
2. Is there a rise in inefficiencies in working capital management?
3. Should a manufacturing company prioritize merit over effective working capital management?
4. Does good working capital management improve profitability?
5. Does ineffective working capital management imply a lack of profitability?
1.4 THE STUDY’S OBJECTIVE
The primary goal of this research is to identify or recommend a good cashier in a manufacturing company in order to meet their needs.
1. To recognize or point out a good cashier in a manufacturing company.
2. To advise manufacturing company management on how to increase their profit rate of growth.
3. Expanding general employment opportunities.
4. Determining the overall impact of working capital on the productivity and profitability of manufacturing companies.
1.5 THE STUDY’S IMPORTANCE
It is significant because, at any time, the management of a business should be able to pay its debts as they arise, as well as take advantage of such business opportunities as reasonably anticipated.
This study is significant for the following reasons:
They achieve their goal of development by establishing management of a manufacturing company rather than relying on imported raw materials, machinery, and spare parts, which are major sources of foreign leakage.
It is in light of these possibilities that research in the finance of working capital management and the profitability of a manufacturing company continues.
Finally, this research would be a valuable resource for students, academic staff at tertiary and higher education institutions, corporate managers, small and large manufacturing companies, and individuals interested in learning more about the impact of working capital on manufacturing company profitability.
1.6 THE STUDY’S LIMITATIONS
This research work is not without limitations, which can be broadly classified into three subheadings as follows:
a. Human constraints
b. Time constraint
c. Material restraint
Under the constraints of human nature, some of the respondents’ attitudes are unremarkable; some of them were so skeptical that they would not wait to release any form of information to the researcher. Time also played a role in the research because I was a final ND student with a lot of work to do within the semester.
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1.7 TERMS AND CONDITIONS
Liquidity refers to an organization’s current financial position, particularly its ability to pay its debts or meet its obligations as they come due.
Solvency refers to a company’s ability to meet its financial obligations at any time, even in the long run, when all assets are converted to cash.
Assets: The value of all items owned by the company after deducting borrowed funds and proprietor equity contribution, or net.
The value of all items owned by the business, such as credit and equity, is referred to as its liability.
Equity or Net Worth: This is the total value of the assets contributed by the business’s debtors.
THE IMPACT OF WORKING CAPITAL MANAGEMENT OF THE PRODUCTIVITY OF A MANUFACTURING COMPANY
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