EVALUATION OF FACTORS AFFECTING THE CONCEPT OF PROFITABLE AS A GUIDE TO POLICY DECISION

PROPOSAL

Management is the hud of any industry and must utilize all the resources at its alisp as to achieve the goals of their respective industries.

The objective of this project titled, “ Evaluation of factors affecting the concept of profitability as a guide to policy decision, is by the government and management on the concept of profitability. Both primary and secondary sources of data collection will be used.

 

The method of analysis that will be used in this study is the mean and standard deviation.

The limitations which will be encountered in the course of this study include: time factor, financial constraints, Refusal of the officers of the company to co-operate with the researchers etc.

 

As findings show that policy decision have a strong effect on profitability, it will therefore be recommended that government should come up with a policy that ill help industries receive both financial and moral support for at least its first five years of operation. The manufacturers Association of Nigeria (M.A.N) is advised to establish training centre where intending entrepreneurs will be trained in the act of entrepreneurship which will also enhance profitability.

CHAPTER ONE

INTRODUCTION

• Background of the study
• Statement of the problem
• Purpose of the study
• Research question
• Statement of hypothesis
• Significance of the study
• Scope and limitation of the study
• Definition of terms

 

CHAPTER TWO

REVIEW OF RELATED LITERATURE

• Cost
• Uses of cost data
• Methods of inventory control
• Costing methods
• Costing techniques

 

Chapter THREE

RESEARCH DESIGN AND METHODOLOGY

• Area of the study
• Population of the study
• Sample and sampling determination
• Instrument of data collection
• Validation of the instrument
• Reliability of the instrument
• Administration of research instrument
• Method of data analysis

 

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

 

CHAPTER FIVE

FINDINGS, CONLUSION AND RECOMMENDATIONS.

• Findings
• Conclusion
• Implications
• Recommendations

 

Bibliography

Appendix

 

CHAPTER ONE

INTRODUCTION

1.1  BACK GROUND OF STUDY

According to Harper (1977) the concept of profitability can be defined as the concept which provides management with alternative course of action in accordance with the various degrees of profitability stating clearly in relevant cost account form individual projects which enables management to select the most profitable.

Most of the policy decision of manufacturing industries are generally directed towards profitability. Policy decisions made under this concept has a direct effect of increasing and enhancing the general profitability of the manufacturing industries concerned.

The origin of this concept can be traced back to the era of industrial revolution. Prior to this era, industrial were run as family concerns but with the industrial revolution, most business grew from the usual family arrangement to large groups. Resources were pulled together and handed over to other people to manage for the owner’s.

Naturally, resource owners must expect a profitable returns from the investments, this urgent obligations forced management to seek ways of carrying out their activities so as to make profitable returns to the resource owners. Investment grew in all dimension until the first and second world wars, one would have expected that after the world war industrialization would have been abandoned but as we have seen today, this was fortunately far from being so. Rather a large number of manufacturing industries grew in importance and also in complexity all in a bid to meet the demands and standard set by the developed countries.

Enough quantity of materials had to be bought and at the same time later which is a very vital commodity had to be allowed to operate in a conducive environment so as to enjoy the benefits of hiring labour prior to commencement or an expansion the manufacturing industry must move with the changing technology, meet it social responsibilities, operate under government stipulations, pay tax as and when due and meet the expectations of the shareholders.

High administrative cost, cost of changing technology, fierce competition, scarce resource, falling economy, cost of government restrictions, the need for maximization of shareholders wealth, poor capitalize etc must be accommodated and adjusted in such a way that total cost of manufacturing a product will not only be less than sales renew but give a good profit margin.

This stipulation of operating under many uncompromising variables gave rise to the need for policy  decision on such things as siting an industry.

• Expansion of an existing industry
• Introduction of a new product
• A change in production design
• Sell or process further
• Close down.
• The nature of this research project requires theoretical approach and analysis which will cover the three dimensional focus of the research, the research focus on the three major areas are;
• The economical factor affecting the concept of profitability as a guide to a policy decision.
• The Endogenous factor affecting the concept
• The political factors.

These three combine to give a broader view of the factor affecting the concept of profitability as a guide to policy decision.

The theoretical orient action of what best provides the researcher the framework for analyzing the factors affecting the concept of profitability were.

1. Theory of location of industry which state that nearness to raw

Materials and available of labour affects the profitability of manufacturing industries. The location of extractive industries for instance depend on where raw materials are to be found. Also mining industries depend on geological, surveys. Agricultural industries depend on side condition and climate. Where the required raw materials are heavy and bulk the industry will be set up near source of raw materials in order to reduce cost.

2. Theory of nearness to market: Bulking or heavy goods are expensive to transport. Base on this, the theory therefore states that such goods be produced near the market.
3. Other general economic factors which includes industries requiring thermal heat need to be near local mines e.g. steel industries.

Tensa (1979) said that the endogenous theory which best suite the purpose of the research is the theory of operation management which is of the view that workers have the same objective with that of management which will ensure a responsible attitude towards organization decision making procedure.

4. On the political factors, the instability of government, restrictions on certain industrial activities were also theories which helped to find out factors effecting the concept of profitability
5. The theory of marginal costing were in dispensation tools for research.

 

1.2 STATEMENT OF THE PROBLEMS

This research work titled an evaluation of factors affecting the concept of policy decision is meant to solve among other things following problems

1. a) Effect of policy decision on the profitability concept in some selected industries.
2. b) Factors of production as a necessary condition for setting up an industry needs to be available.
3. c) How Government policies affect the concept of profitability.

1.3 PURPOSE OF THE STUDY

The purpose of this study includes the following

1. To ascertain the effect of policy decision on concept of profitability.
2. To find out the availability of factors of production
3. To determine the effect of ecology on concept of profitability
4. To determine how government policies affect the concept of profitability.

 

1.4 RESEARCH QUESTION

To guide this study the following question were formulated;

1. To what extent does policy decision have effect on concept of profitability?
2. To what extent the factors of production available in setting up industries?
3. How does ecological consider action affect.
4. To what extent does government policies affect the concept of profitability.

 

1.5 STATEMENT OF HYPOTHESIS

The following hypothesis have been formulated to guide the study;

HYPOTHESIS ONE

H₀:   There is no significant difference at profitability level 0.05 between the senior staff and junior staff men perception on effect of policy decision on concept of profitability.

H₁:  There is a significant difference at profitability level 0.05 between the senior staff and junior staff means perception on effect of policy decision on concept of profitability.

H_α:  There is no significant difference at profitability level 0.05 between the senior staff and juniors staff mean perception on available of factors of production.

H₁:  There is significant difference at profitability level 0.05 between the senior staff and junior staff means perception on availability of factors of production.

 

HYPOTHESIS THREE

H₀:   There is no significant difference at profitability level 0.05 between the senior staff and junior staff means perception on the effect of government policies on profitable industries.

H₁:   There is a significant difference at profitability level 0.05 between the effects of government policies on profitable industries.

 

1.6 SIGNIFICANCE OF THE STUDY

The study of the factors effecting the concept of profitability as a guide to policy decision is unique to the extent that is focused at helping student of accounting and financial studies in terms of cost they affect co-operate profit. Also to benefit from this are those preparing feasibility study for terms of industries to be used.

This study will also help potential foreign investors to obtained both theoretical and practical information on the profit in establishing of production.

Finally, it will enable the research have a depth knowledge of this study and open new areas of further research for the students and industries researchers.

 

1.7 SCOPES AND LIMITATION OF THE STUDY

This study centres on factors that affect the concept affect the concept of profitability and how it guides policy decision. For easy analysis this study is limited to one industry in municipality. This industry is

The limitations encountered in the course of this study includes: firstly, refusal of offers of the company to co-operate as expected, secondly, Reluctance of the staff of the company to supply the needed information. There were also time factor and financial constraints such as high cost transport and textbooks.

 

1.8 DEFINITION OF TERMS

1. The manufacturers Association of Nigeria (M.A.N). This a body establishes to establish training centres where intending entrepreneurs will be trained in the act of entrepreneurship.
2. Economic order quantity (E.O.Q); it is an important aspect costing relevant to material control.
3. Profitability; this has to do with running a business profitably ie making a profitable investment.
4. Policy: This is a plan of action adopted by a government, business etc.
5. Decision; This is a conclusion reached or a judgment arrived at

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COST CONTROL IN MANAGING INDUSTRIES: A CASE STUDY OF WEST AFRICA MILK COMPANY PLC., LAGOS

 

PREFACE

The primary aim of this research project is to prepare manufacturing establishment thoroughly for the task of controlling their cost of production concentration has therefore made on the pertinent factors necessary for the fulfillment of this project.

This work is written to include the dangers of uncontrolled costs and need and possible method of cost control.  The method have been found necessary in familiarizing manufacturing organizations with the act of controlling their production costs which will avail them the opportunity of maximizing profit without much price increase.

It is therefore suggested that big enterprises and public corporations should get acquainted with the techniques developed in this project and apply them whenever possible in controlling their costs of production.

ABSTRACT

 

Profit maximization is the pursuit of every business organization.  Profit itself is the excess of revenue over expenditure.  To obtain this profit, increase in selling price of the product or reduction in the cost of production is inevitable.  Since excessive price increase is dreaded by the public, it becomes necessary to achieve the business objective through controlling the cost of production of each product.

This project, therefore, is undertaken to give actual background on cost control measure, the need for the control, cost items to be controlled and affect of uncontrolled cost of production on the organization, using the West Africa Milk Company PLC. Lagos as a case study.

According to the study, uncontrolled costs could lead to higher operating costs, lower profit margins and dissatisfaction among shareholders.

Using observation, interview and questionnaire method, it was found that cost could be controlled in the different manufacturing areas such as material, labour and overheads.

Also discussed was the benefit of production cost control to the industry under study.  The major findings was that company has not been able to produce to its installed capacity, it employed a system of remuneration that guaranteed a fixed salary and its production budget was based on the average performance of previous year results.

However, the use of standard costing has been advocated because it will avail the company the opportunity of company actual cost with standard in order to check necessary variances and also to make for easier interpretation of management reports.

Chapter one

• Introduction 1
• Statement of problem 7
• Statement of objectives 8
• Significance of the study 9
• Scope and limitation 10
• Definitions of terms 11

 

Chapter Two

Literature Review                                                          13

• Material Control 14
• Labour Control 22
• Overhead Control 30
• Cost Control 33
  • Budgetary Control 33
• Standard Costing 49
• Variance and Variance Analysis. 59

 

Chapter Three

• Research Deign and Methodology 74
• Sources of Data 74
• Measurement Instrument 76
• Instrument Design 77
• Instrument Administration 79
• Instrument Distribution
• Reliability of Data 82
• Data Analysis Method. 83

 

Chapter four

• Data Analysis 84
• Costing System 84
• Material costing           86
• Labour Control
• Overhead Control 91
• Budgetary Control. 91

 

Chapter Five

• Findings 96
• Recommendations 100
• Conclusion 102

Bibliography                                                        104

Questionnaire                                                       107

CHAPTER ONE

 

 

1.1     INTRODUCTION

Manufacturing is becoming more complex and competitive with each passing day.  The complexity can be viewed from the angle of technology, computerization, raw material sourcing, governments’ economic policy impact and cost control.  While some of the above factors are externally controlled, such factors are costs controls, forms an internal efforts of the firm.  For instance, computer and technology industries can be acquired by the firms based on expert advice from consultants but cost control is a conscious effort by the management of a firm to reduce of production and thereby gaining advantage over the other firm in the same industry.

Cost control becomes imperative when one looks at the objectives of firms, which among other things include making as much profit as possible to satisfy the investors, becomes a good corporate entity to customers, to government and other external member, to government community.  All these aims are tied to the cost control measures.

“Because transaction usually involves both revenue and costs with difference between the two being profit.  Since profit equals revenue (output) runs cost (input) it can be seen to be a measure of efficiency in that it relates output to input.  Therefore, an organization with N100 million and cost of N60 million is more efficient than the industry but having revenue of N100 million and cost of N70 million since the former loses less input to produce a given output”.

Certain programmes introduced by government aim at streamlining the economy such as structural Adjustment program (SAP) 1986, second-tier Foreign Exchange Market (SFEM) 1986 and deregulation of interest rates in banks created effect which lend credence to costs control by many people.  These programmes have left flows with low capacity utilization high cost of imported spare part, high costs of equipments and consequently high cost of their products.  The effect of the above situation is that top management put pressure on their organization functional areas at each point to control costs.  Therefore, jobs are being timed seriously, material better controlled standards are being set and budgets are being made more detailed.

Costs control can be done in two ways “operating control and accounting control”.

Operating control is done by controlling costs through personal observation and supervision of operations.  Such control attempts to keep wastes idleness, inefficiency labour and other costs lead in checking costs are based on physical and procedural safeguards, it ensures that costs are incurred on proper authority assigned responsible for different phases or costs incurred and carry out effective supervision so that factors upon which costs are incurred are maximally utilized.

Accounting control, on the other hand contemplates the creation of a system of recording which will establish accountability for costs and the employments of current pertinent and coincide accounting and statistical reports, to reveal how the people responsible for costs are discharging their responsibilities.  Thus accounting control involves the establishment of cost standards and development of variance therefore, the assembly of data for constructing budgets covering all phases or activity and the preparation of timely statements of financial condition and the making of future policy.

This research will therefore attempt to x-ray the cost control measures in West Africa Milk Company (WAMPCO) PLC. as a case study.  Finding from WAMCO PLC. Is equally to literature review of chapter two, which acts as standard for cost control in order to form opinion.

West Africa Milk Company PLC. (WAMCO) with factory site at 7B Acme Road Ogba Ikeja in Lagos was incorporated wide and also involved in cross-boarder trade.  It has 100 staff nationwide.  WAMCO operated in Nigeria for 31 years and in Holland for 50 years.  Production started in 1975 with peak milk.  WAMCO depend degree of 80% on import raw material on production and have low capacity of customer nationwide.

In a bid to have a stable market West Africa Milk introduced “Three Crowns” and another brand of evaporated milk.  Three Crowns was introduced in the year 1986 and peak milk 50 years.  The raw material for the products such as hydrous milk fat, skin milk powder and buttermilk power are imported from Holland.

West Africa Milk Company PLC is an affiliate of Frisland Coberco Diary Foods (FCDF) Holland.

 

Figure 1.1:  A FRAMEWORK FOR COST CONTROL SYSTEM

INPUTS                                                               OUTPUTS

Capital labour                                            Returning of investment

Material services  Input: The Company     consumer satisfaction

Knowledge, plans                                       goods and services

and aspirations                                           market shares.

 

CONVERSION UNIT

If the idea of input conversion system is to cost control we have the diagram below:

INPUT                           CONVERSION                      OUTPUT

 

 

 

 

 

The diagram contains three inputs, objective or desired policies or (constrain) and plan or means to ends within resources that are available to the company (sales forces plant and equipment materials etc.) and allocates these in the best available way in line with requirement for the attainment of objectives.  The detailed workloads must be established and standard must be set for comparative purposes.  This is finally followed by executive stage the plan is put into effect, the major output in this simple framework or performance are feed backs to the decision makers and are compared with desired levels of performance this necessitates correction of deviation from plan if any.

 

• STATEMENT OF PROBLEMS

The fact that the manufacturing company’s aim is to maximize profit and that this will have to be met under certain conditions such as competition with other firms and government economic policies give insight into the problem of production costs control.

Government regulation such as SAP and SFEM leave firm with such problems as low capacity with its attendants, high cost of fixed overhead per unit of product, high cost of foreign exchange (High exchange rate) which causes high costs of spare parts, raw material and equipment.  All these cause high cost of the products produced by their firms.

There high costs are posed to consumers of their products.  But given the economic predicament of our time some consumers boycott their products or seek alternative cheaper substitute.  This limits the scope of market of their firms.

Briefly the problems emanating from the study are:

• Low capacity utilization
• High cost of production generally
• Rationalization of labour force retrenchment
• Lack of export orientation

 

• STATEMENT OF OBJECTIVES

The objective of the research is to examine cost control measure by the manufacturing firms in order to compare it with cost control measure in the operation.

(a)     Evaluate the control system as to their effectiveness.

(b)     Ascertain whether the present levels of performance are adequate for plan.

(c)      To find out any inherent deficiency and to make recommendation for solving problem.

(d)     To come out with a realistic and feasible proved on how idle capacity both in labour and material within the enterprise could be eliminated.

(e)      Improving and updating any absolute technique in line with recent trends.

(f)      Finally, it is hoped that the research will be a guide for future decision makers and serve as a benchmark for future research students in the field of production cost control.

 

• SIGNIFICANCE OF THE STUDY

Since production cost constitutes a major proportion of any manufacturing establishment operating costs, the result of this study would enhance the effective and efficient control of such costs by management so as to stay in business.

It would also recommend ways by which the highest levels, in order to achieve its desired profit objective.  In addition, the study will be of benefit to other decision makers and future research work on the same related problem.

 

• SCOPE AND LIMITATION

The research is a five-chapter analysis of cost control measure in West Africa Milk Company PLC. and its different postulate on cost control by eminent writers lecturers and practitioners.

Chapter one dealt on the general business outlook and effect of cost control on a firm.  It also presents brief history of West Africa Milk Company PLC being used as case study in the research.

The second chapter reviewed numerous literatures by many knowledgeable scholars.  This chapter acts as the standard that is used to measure actual practices of firm as regards cost control.

The third chapter is on research procedure, research instruments and their administration.  The chapter tried justifying the reliability of amount of data that was used in the research.  The fourth chapter analyzed data on costs control got from West Africa Milk Company Plc. to ascertain the extent of its conformity.

The final chapter, that is five, talked on the findings recommendation and conclusion.  To achieve the above, the researcher designed questionnaire information on procedures, and policies of the firm on control of costs.

 

• DEFINITION OF TERMS

Costs:                   This is the amount of expenditure actual of nominal incurred on or attr4ibutable to a specified thing.

Control:      This is defined by Oxford Advanced Learner’s Dictionary as “Power or Authority to direct, order or restrain”.

This can be seen in the ways the manager order or limit the use of resources of an organization to achieve maximum efficiency and effectiveness.

Cost Control:       This provides useful information to management in exercising control over costs.

Manufacturing:     This is the act of making something of value from a single material (analysis) or combination of materials (synthesis).

Synthesis is chosen because this is the method used by the West Africa Milk Company PLC (WAMCO) through a process known as recombination use such materials as hydrous milk peak, silk milk powder, buttermilk and refined palm oil to produce evaporated milk.

Cost Centre:         A cost is a location, person or item of equipment (or good of these) for which costs may be ascertained and used for control purposes.

 

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EFFECTIVE WORKING CAPITAL MANAGEMENT IN PAINT INDUSTRIES (A CASE STUDY OF MARSHAL PAINT AND CHEMICAL LIMITED ENUGU – ENUGU STATE)

PROPOSAL

It is the intention of this researcher to study and investigate in the paint industry the relevance effect and the importance of effective working capital man. A case study of Marshal paints and chemical company Ltd Enugu. This research proposal is concerned with the identification of liquidity and cash management of Marshal paints and leading paint company east of Niger. Finding solutions to the problems so identified and recommending them to the management for approval and implementation.

In the pilot study carried out by the researcher several discoveries wee made as to why the working capital management of the company is undertaken by a separate department.

Amongst these are efficient inventory management which results in maintenance of smooth production process, survival, profitability and growth.

The scope covered include the paint factory in Enugu and Anambra state and it is the researchers believe that the study will be of much benefit to the company, the wholesalers, retailers and consumers.

Finally, two approaches were used in collected data for the research. These are primary and secondary data.

CHAPTER ONE

• Introduction 1
• Statement of problem 3
• Objective of the study 5
• Research hypothesis 7
• Assumption of the study 8
• Scope of the study 9
• Significance of the study 9
• Limitations of the study 11
• Historical background of Marshal paints & Chemical company13
• Organisation of the study 15
• Definition of operational terms                                     16

 

CHAPTER TWO

• Review of related literature                                           21

2.1     Meaning of working capital                                           21

2.2     Composition of working capital                                    23

2.3     Factors of affecting the composition of working capital         24

2.4     Current assets                                                                26

2.5     Current liabilities                                                           28

2.6     Management of working capital                                    29

2.7     Types of working capital                                                        30

2.8     Characteristics of working capital                                 30

2.9     Sources of  working capital                                           31

2.10   Uses of working capital                                                           33

CHAPTER THREE

• Research methodology and procedures 37

3.1     Selection of data                                                            38

3.2     Collection of data                                                                    38

3.3     Nature of data analysis                                                  41

 

CHAPTER FOUR

• Data presentation and analysis 45
• Presentation of data 46
• Analysis 47

 

CHAPTER FIVE

5.0     Summary and recommendation                                               69

5.1     Summary and findings                                                   69

5.2     Recommendations                                                                   71

Bibliography                                                                  74

Questionnaire                                                                77

 

CHAPTER ONE

INTRODUCTION

One of the major objectives of most business organisation is profitability. However, in financial management, it is generally believed that liquidity is more important than profitability. One of the reasons for this is that most organisations make profits, but do not possess enough or adequate liquid asset to off-set current obligations. Inability to make payment as t when due may definitely have serious consequences on the organisation. This situation may give rise to a loss of goodwill and furthermore any result to technical insolvency which may lead the organisation to unintended liquidation.

A second reason is that uncertain inherent in this present days economic/business environment threatens the survival of every business, thus making sound liquidity and cash management a necessity points in corporate planning. This claim is substantiated in the recent times by the fact that the importance of management  of liquid asset has been gradually and systematically gaining prominence and growth in most manufacturing companies or firms. This incidental prominence and growth of liquidity management makes it very apparent that no firm can survive without an effective and efficient management of its liquid resources which is the working capital.

The working capital by all standards is been and regarded as the life –wire of any business organisation it is particularly important in the daily maintenance and running expenses involving cash. For the purpose of this project, the working capital of a firm comprises of the cash balance, marketable short-term securities, inventories and accounts receivables. On the other hand, net working capital is the excess of current assets over current liabilities. Therefore, working capital management refers to the efficient administration of both the current assets and current liabilities.

The rationale of working capital management is on the realization that current asset holding should be increased to the point where marginal returns on increases in such assets are equal to cost of capital required to finance such additions while current liabilities should as much as possible be used instead of long term debt whenever this reduces the average cost of capital. Current assets characteristically constitute more than half the assets of most businesses and the size and relative volatility of these assets make it necessary for such assets to be closely monitored. Thus disproportionate amount of time of the financial controller is devoted to the management of working capital.

Finally, efficient management of working capital is important to both large and small firms, especially during this austere period because if the efficiency of managing working capital is not available, no amount of finance provided will transform a financially weak organisation performance into a strong and dynamic organisation with a remarkable reputation.

 

• STATEMENT OF THE PROBLEM

It has been recognized that one of the greatest problems of this present day firms is the lack of effective and efficient management of the resources at their disposal. This problem is worsened considering the present fiscal policy of banning the importation of some essential raw materials, leaving the manufacturing firms with meager source of locally few produced raw materials.

Decisions effecting liquid assets are influenced by an obvious fact and subjective judgment of most companies. The financial controller of a company my have some of the facts of the cost of borrowing from a bank but these facts are only part of the information that he requires. On the other hand, there are also subjective benefits arising from having more cash. The financial manager may decide to buy some insurance against financial illiquidity by arranging and paying for a credit agreement committing a bank to lend up to an agreed sum.                   

Despite all these explicit and implicit costs, still in profits liquid assets may not mean shortage in profits. According to Scapers (1977) “profits may appears satisfactory while operations are claiming financial resources of the business”. still in the same view, Harthey (1985) said that “profitable firms have been known to have a considerable cash surplus”.

On this note, therefore, the problem is to identify the difficulties many manufacturing firms find themselves in  when they perceive that profits mature to the detriment of running illiquid. This will go a long way to identify the relationship existing between the management of working capital.

• OBJECTIVE OF THE STUDY

It is not uncommon to find a company over-loaded with inventories and other investments when cash is in short supply for payments and other cash commitments. It is equally not uncommon to find some firms heavily over-loaded with idle cash when thee are very many profitable investments that could have tapped with some of such cash.

On the other hand, over-investment in fixed assets, poor collections on receivables, bad debts and unbalanced or absolutes inventories can quickly transform a profitable company over-trading on creditors cash and bank loan into a company with solvency problems. The concretionary monetary policy by this present military administration and its subsequent effect on the cash squeeze on banks had made it most difficult for firms to obtain short term financing from financial institutions.

According to Mabogunje the restrictive monetary policy introduced to curb inflation by moping up excess liquidity and curb demand in the economy has brought Nigerian private sectors and manufacturing companies face to face with the most important objective of business. with the reduction of Wain in-circulation and the increase in the price level occasioned by foreign exchange market (FEM), companies are faced with excess stock which they are unable to dispose of owing to a fall in the consumer demand. The light of the above therefore, it is the general objective or purpose of this research project to do the following: –

1. To find out if enough inventory levels have been maintained by the management of Marshal paints and chemical company in order to enhance a growth running of the production process.
2. To examine if the minimum cash level has been adequate in the company.
3. To critically examine the credit policy of the company.
4. To investigate if the company has adequate current assets

     to meet its maturing obligations.

5. To identify the extent to which either the presence of working

     capital management.

Finally, it is hoped that the results of this research study will provide useful information to the management of Marshal paints & chemical company Ltd.

 

• RESEARCH HYPOTHESIS FORMULATION

Many firms do not recognize the concept of working capital management formally and in practice, no proper attention is given to this concept. The research project is therefore, directed towards finding out whether manufacturing firms that have not been practicing the concept of working capital management have been loosing profits from this policy. To enable the researcher carry out this study, the under-listed hypothesis would be empirically tested.                             

Ho₁:   Effective working capital management does not improve the performance of manufacturing firms.

Ho₂:   The management of cash in Marshal paints & chemical company is effective.

Ho₃:   The inventory control in Marshal paints & chimerical company is adequate.

Ho₄:   The management of account receivable is not efficient in Marshal paints & chemical company Ltd.

 

 

• ASSUMPTIONS OF THE STUDY

For the purpose of reducing complexities of facts and figures in order to make research to be meaningful and objective, the researcher made the following assumptions.     

1. That marshal paints & chemical company limited produces textured paints, gloss, emulsion and liquid detergents.
2. That Marshal paints & chemical company limited and few other paint companies are capable of making up the industrial average.
3. That the Marshal paints & chemical company limited comparable in size with these other firms.
4. That the management of Marshal paints & chemical company limited has been facing some difficulties when they want to increase the needed corporate performance without the consideration of efficient and effective capital management.

 

 

 

1.6     SCOPE OF THE STUDY    

The variables or purpose of this research work is to appraise effective working capital management in paint industry. This study is restricted to Marshal paints & chemical company limited Enugu. For the purpose of industrial average, some other painting firms are used. However, with reference to working capital man, the elements covered and as shown here under:-

1. concepts of cash management
2. concepts of inventory management and
3. concepts of short-term marketable securities
4. review or management of account receivables.

It is the intention of the researcher to concentrate proper study on these elements so that their effects would be critically examined on performance position of Marshal paints & chemical company limited.

 

1.7     SIGNIFICANCE OF THE STUDY

The need for the study cannot be over-emphasized as it will be of great significant to readers, business men and women, manufacturers, especially paints factories, corporate bodies and government. The study will no small measure enlighten the readers on the need, benefits or importance of effective working capital management, especially in paint industry. It will further highlight measures to be taken by corporate bodies such as paint factories in order to attain economic stability, self-reliance investments and required autonomy and flexibility in decision making. it will equally enable some paint factories to realize their mistakes for not attaining the much needed importance in the concept of effective working capital management. By this research work also, students of accountancy, banking/finance, business administration and management, having gone through this work, will know more about the effectiveness and importance of effective working capital management in industries firms and government agencies. Furthermore, effective working capital management is an important goal to be achieved in manufacturing firm for maximum profitability.

The major significance of this study, and hence its relevance lies in its aim of educating the readers on the basic and conflicting problems of manufacturing firms in Nigeria. the study will help to highlight some of the factors responsible for ineffective working capital man in corporate bodies and manufacturing firms, especially paint industries. In the same view, the study enable manufacturing firms to devise measures necessary for the application of effective working capital management.

Finally, the recommendations and findings for this research project will be a stop towards the improvement in effective working capital management in paint industry and other corporate bodies alike.

 

• LIMITATIONS OF THE STUDY

One of the major constraints was limited time of study considering poor postal services in the country mailed questionnaire took some months before they arrived to their destinations. In addition, office work activities were often foregone for interview purposes. Ignorance which gave rise to delay on completion and return of questionnaire by the respondents contributed in no small measure to the limitations experienced by the researcher. The biases and prejudices of the respondents together with demand for gratification contributed further to the limitation of this research work.

Some respondents had the feeling that the researcher might have received some greats from the sponsoring institution or the government to carryout the study. Another major constraint was lack of adequate finance to expand the study by way of visiting all the paint factories in the country.

Furthermore, response from respondents were not encouraging, even through they were assured that information obtained shall be kept secret and used only for the academic purpose. Actually, for obvious competitive reasons, in the pint industry, the company management concealed some official information which would have enhanced the validity, objectivity and reliability of this research work. there were lots of claims of unnecessary official protocols and the use of the today, come tomorrow syndromes.

This syndromes had a great impact on the researcher considering the tight schedule and the distance between the place where the research was conducted and the researchers palace of work.

Finally, the researcher will happily welcome or accept any error, inadequacy of this research work and any constructive criticism by anyone in the course of going through this research project.

 

• HISTORICAL BACKGROUND OF MARSHAL PAINTS & CHEMICAL COMPANY LIMITED

Marshal paints & chemical company limited was incorporated in 1987 and commenced production of paints in 1993. Its capacity as at November 1993 was 10000 litres of paint daily. In 1995, the installed capacity rose to 25000 lites of paint daily and the capacity continued to grow and expand until it hit 40,000 litre of paint on a daily production basis in 1997.

It became operational in January 14, 1993 when the first litre of paint flowed out of Marshal paints. The management had the idea of increasing its existing products, currently, the company is producing about seven range of brands of paint and paint chemicals.

Among these are Marshal tex, Marshal gloss, Marshal Emulsion, waterproof textured oat and paint dispersary.

As Marshal paints & chemical company limited is growing in capacity, the quality of its number of products were given utmost priority. In 1996, Marshal paints were certified by the standards organisation o Nigeria (SON). This improved quality contributed to their effort in outside market. Where as other paints companies was going out of business, marshal paint is mainly foreasys throughout Nigeria. a clear indication of high quality standard, good marketing strategy and commitment to excellent.

The management had been nursing the idea of diversification which they believe is an effective weapon for combating economic depression. In view of this the company in 1992 had commissioned a detergent company known as Mastea liquid detergent. The company also undertake the production of shampoo and other agro chemical like brand improver.               

Nonetheless, with a numerical staff strength of over 50 workers, the management believes that their performance over the past years is satisfactory and their products are getting increasing market share.

 

 

1.10   ORGANISATION OF THE STUDY

This research work is divided into five main chapters. Chapter one is made u of introduction of the project topic, statement of the problem, objective of the study, research hypothesis formulation, assumption of the study, scope of the study, significance of the study, limitations of the study, organisation of the study, Definition of operational terms and the historical background of Marshal paints & chemical company limited, Enugu.

Chapter two deals with the review of work and literature already done on the topic by others. This chapter deals on the concept of working capital management, demands of cash management, the concepts of inventory control and finally with review of management of accounts receivables. Chapter three identifies the methods of procedures used in carrying out a research this research. It deals with the selection of data, collection of data and reliability of data. Chapter four deals with the presentation of data collected and the analysis of data. The hypothesis are also tested in this chapter.

The final chapter summarized the findings of the research. This chapter also offers suggestions in the form of recommendations.

 

1.11   DEFINITION OF OPERATIONAL TERMS

To dismantle the problems or difficulties which may rare their heads as a result of lack of knowledge of the underlying concepts, the researcher wishes to define the following terms of that the subject matter will not suffer from connectional misunderstandings concealed under a semantic smokescreen.

 

ACID TEST RATIO

          “Ratio of a company’s current assets (excluding inventories) to its current liabilities. It is used as a supplementary measure of the extent to which liquid resources are immediately available to meet current obligation”.    

 

 

 

ASSETS

“All items owned by a business firm or individual (including property rights) which have a money value”. All items listed on the right hand side of a blank sheet in company accounts in Nigeria.

CASH BUDGET

          “A statement of planned cash receipts from sales and other sources, and used of such receipts during the budget period”.

CORPORATION

          “Is an entity created by law empowered to own assets, incure liabilities and engage in certain specified activities”. It is an artificial being, intangible, invisible and exists only in the eye of the law. It can sued and be sued.    

CREDIT LINE

An arrangement whereby a bank agrees to consider in a friendly manner a loan application but does not make a firm commitment to lend the fund.

 

 

CURRENT ASSETS

          “Are assets convertible into cash or generally exported to be converted into cash within one year. Included are such items as cash, marketable securities, notes and accounts receivables from customers, inventories and prepared expenses.”          

CURRENT LIABILITIES

“Items due and payable within one year”.

CURRENT RATIO

“Is the relationship between the current assets of a firm and its current liabilities or maturing obligations. It is not only a measure of liquidity, but also a measure of the margin of safety that management maintains in order to allow for the inevitable unevenness in the flow of funds”.  

ILLIQUID

Not easily convertible into the sum of money originally invested.

LIQUIDITY

          Ability to convert into ash the liquid assets with the shortest possible time for a price about which there is a little uncertainty.

 

MANAGEMENT

          “Is the direction of an enterprise through plan organisation, co-ordinating and controlling its human and material resources towards the achievement of a pre-determined objective”.

NET WORKING CAPITAL

          This is the current assets loss the current liabilities.

OVERTRADING

To sales with inadequate working capital especially liquid assets.

PROFITABILITY

          This is the measure of management’s efficiency in managing the resources the shareholders entrusted in its care.

PROFITABILITY RATIO

          “The firm’s per is measured by its ability to generate prift. Profitability ratio gives the final answers about how effectively the firms is being managed”.     

 

 

WORKING CAPITAL

          “Working capital is the current asset of the firms which include cash, marketable, securities, accounts receivables and inventories”.

 

 

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EFFECTIVE CUSTOMER SERVICES AS A MARKETING TOOL IN THE BANKING INDUSTRY (A CASE STUDY OF GUARANTEE TRUST BANK PLC GTB)

ABSTRACT

 

The aim of this study is to find out by empirical evidence the use of effective customer service delivery as a marketing tool in banking industry by means of analysed reports, interviews and financial summary report over a period of ten years.

Also our emphasis is based on banking Industry specifically Guaranty Trust Bank Plc.

Achievement in areas of customer service and accredited changing needs of customers sophistication leading to hi-tech banking with information technology occasional by the immense competition the industry has witnessed in the past decade.

Throughout the study, the inquired of questions requiring innovation responsiveness, exceptions remain very low and restricted to few concepts such as graphs, ratio, percentage and analysis.  This contribution these concepts varies with the higher percentage in theory than in particle.  It was also found that there is significant level of product development and product differentiation on customer satisfaction although the instruments used for the study contained mathematical calculations.  For the company to attain this level of performance in customer service.

The knowledge of market operation in necessary.  Profitability as a financial strategy requires the use of entire market behaviour as a general method of formulation of policies.

The use of competitive advantage to quantity customer service problems and to described corporate reputation/image is therefore advocated.

Lastly the attention of financial expert designers marketers anthers publishers of textbooks and organizes of marketing services have been drawn to take cognizance of the changing nature of customer service.

 

CHAPTER ONE

1.1     Brief overview of the subject matter                        1

1.2          Background of the study                                       1

• Statement of Research problem 3
• Significance of the study 5
• Hypothesis formulation and research methodology question8
• Scope and limitations of the study 10

CHAPTER TWO

• Contemporary Developments in Banking 11
• The Nigerian Banking perspective 12
• Marketing services 14
• Customer services delivery an appraisal of the financial sector.20
• Customer service in Guaranty Trust Bank Plc 26
• Exploring Guaranty Trust Bank Plc profile 33

CHAPTER THREE

• Research methodology 50
• Restatement of the research question and statistical testing 50
• Research design                                                  51
• Characteristics of the study population 52
• Sample design and procedure 53
• Data collection instrument 55
• Statistical tools of Analysis employed and why 56
• Limitations of the research methodology 62

CHAPTER FOUR

• Introduction 63
• Analysis of data 65
• Representation and Analysis of data According of Research Question.                              66
• Statistical testing 80
• Responses to personal interview 90

CHAPTER FIVE

• Summary 95
• Conclusion 96
• Recommendations 98

Appendix 1                                                            101

Questionnaire for GTB PLC Staff                            109

Appendix II                                                            109

Bibliography                                                          116

 

 

CHAPTER ONE

 

1.1       BACKGROUND OF THE STUDY

Peter Drucker (1962) describes the millenium are in as on era of the 3C’s perplexing complexities intense competition and accelerated change.

The global banking environment has witnessed rapid changes in the 90’s and that had pasted serious challenges to the financial services sector.  The changing customers’ demands and technological innovations home already transformed the face the banking with the traditional branch banking appearing out of time and specialization becoming a common feature.

The global development such as globalizations, universal banking e-commerce on-line banking interest banking home banking and other technological developments reflect a trend towards effective and quality service delivery.

While financial supermarkets where all banking need can be supplied at one bank are developing at one end, at the other banks are adding new products and services to their traditional offering.  Hence facilities such as smart cards internets ATM, EFTPOS and various forms of electronic delivery channels which are common features in developed economics are spreading world include.

Kevin Hall (2001) observed “the most successful financial service firms of the coming decade will be those which learn to see the world through the eyes of their customers.  their eyes will come from investing in technology which can generate preference and patterns of behaviour allowing the firms to measures the value of specific customers on the basis of their actual behaviour rather than their assumed behaviour”.

In this research work our emphasis is on the banking industry and specifically Guaranty Trust Bank Plc.  The purpose of the project topic or research work is to be able to bring to the fore the accelerated changes in customer services in banking industry occasional by the immense competition the industry has witnessed in the past decade.

The changes of changing customer needs and sophistication leading to “hi-tech banking” with information technology and globalization dictating the pace towards customer satisfaction.  It is just product/service delivery that matter in the industry but how it is packaged the place it in delivered and cost (price) of delivering same to meet customer satisfaction that is the difference between efficiency in service delivery and effective delivery.

Guaranty Trust Bank Plc is chosen for this research work is a case study because it had been both a pioneer financial institution in effective customer service delivery and a pacesetter ink a distinct and clear and vision of service delivery as portrayed in its mission statement “Effort will be made in this studies to correct the widely held views that technology is the high way for banks in achieving high level of productivity” Okafor (2001) Because this view down played the role of human resources in effective customer services.

 

1.2       STATEMENT OF RESEARCH PROBLEM

According to Central Bank of Nigeria briefs series No 98/01 a financial system is a conglomerate of various institutions market instruments and operator that interact with in an economy to provide financial services.

The financial system plays an important role in the economic stabilization growth and development by acting as a channel through which saving can finance investment.  The financial system can be identified in a variety of ways, this can be by their generic names for examples,  Central Bank commercial Bank Merchant Bank, Industrial and Development Bank, Investment Bank, New Banking financial institutions the stock market and the foreign exchange market or by the way they are being funded or by their functions.

As a financial institution operating in a competition environment, this study hopes to discover the ways effective customer service has sound it a competition advantage increased the profit level and aided the corporate image of the banking institution with particular reference to Guaranty Trust Bank Plc.

As Fola Adeola put it in 2000 “the operating environment is rife with existential vagaries on what the millenium helds”.

We shall determine the extent/impact the customer service excellence has helped the present status of the bank with competitive advantage over other banks in the same industry.

 

1.3       SIGNIFICANCE OF THE STUDY

An organization cannot operate in Isolation without being affected by its environment.  As this environment becomes more competitive, there is need to examine the factors that distinguish the organization’s way of doing business and the apparatus technical and business skill needed to increase the organization efficiency and effectiveness.

“The increasing phenomenon of globalization and the fast spreading adoption of e-commerce are shirking the world into a harmless or perhaps a single house.  Customers of banks can maintain bank account in the United struts of America even when resident in England and transactions with merchants based in for East all through the internet”. (Sanusi 2002).

Global networking and other technological innovations are powerful assets if used as competitive weapons.  Innovation such as being entertained and educated by materials on users network (USENET) and the world mide web (WWW) can be used to build customers service on the net.

The increased demand for the efficient collection dissemination and processing of information which are evident become of various economic factors such as global competition market force and customer changing demands are facing banks to device strategies to cope with the competition in order to survive and achieve growth in the new era.  Whatever strategy adopted by each bank, it is believed that it should at the minimum, include the following.

• Innovativeness
• Responsiveness and adaptive to customer needs
• Expectation of and capability to manage change for advantage
• Appropriate technology
• Having right people with right attitude
• Which creation met just market sharing through new products and product differentiation.

 

1.4       OBJECTIVE OF THE STUDY

This study will therefore aim at carefully analysing the following.

1. To identify and appraise the factors that contribute to how effective bank responds to the competition environment by the use of practice service oriented innovations.
2. To determine the effective customer services on customer needs, staff competitors and consultants.
3. To access how banks can manage changes for advantages
4. To determine the effect of the new information technological advancement i.e e-commerce, e –trade or e-business as the cutting edge of today’s business.
5. To access the effect of product development and product differentiation in which creation and customer satisfaction.
6. The study should also determine the extent and speed of responsiveness and adeqtiveness of banks stricture to customer needs.
7. Finally the study will evaluate the place of hiring the right people with the right attitude to effective customer service.

 

• RESEARCH QUESTIONS

The fundamental research questions include the following:-

1. What factors are responsible for the proactive customer oriented innovations in a competitive environment.
2. What is the effect of having an effective customer service delivery system on the customers staff competitors and consultants.
3. What effect has information technology like e-commerce e-trade and e- business on-line- banking internet banking ATM etc has an effective customer service delivery.
4. How has the attitude of staff charges in customer needs and environmental vagaries affected effective customer delivery.
5. Has miche creation in terms of new product creation and product repackaging product differentiation market segmentation etc help to development customer service quality?
6. Can appropriate and sophisticated technology without the right staffing work in customer service delivery?
7. Effective customer service and corporate reputation and image.

 

1.6       HYPOTHESIS

H0:      Product development and product difference has no significant effect on customer satisfaction.

H0:      Effective customer services has no impact on customer needs.

H0:      Responsiveness and adaptiveness of banks structure has no

significant effect on customer needs.

 

1.7       SCOPE AND LIMITATIONS OF THE STUDY

Research project in developing nations like Nigeria in looked upon with skepticism by most people.  There is always an element of suspicion in them is to the intention of the researcher.  This is more with areas as sensitive as Banking where most information are treated is classified and confidential.  It is therefore true as John Krainer in his book Marketing Research to developing countries (USA 1985) pointed out that “research is Federal by Government business companies and institutions become it might expose certain defficiencies”.   Due to this apathy to research the researcher found it a bit difficult to collect information from people especially staff of Guarantee Trust Bank Plc.  Some were annulling to supply any information at all while others inllingly supplied inaccurate information or at times become aggressive.

Another constraint was time to visit every where Guarantee Trust Bank has customer service centre.

Despite these constraints the researcher has tried to work round the check to do considerable justice to the research work.  This research will therefore be limited in dept to the bank.  Guarantee Trust Bank Plc operating in Lagos and Onitsha area.  The business environment in this case include the employees customers competitors and consultants while such other variables like economics social and political environment are considered as fixed for the prepare of the study.

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THE NATURE AND CONSEQUENCES OF JUVENILE DELINQUENCY IN NIGERIA: A STUDY OF ENUGU NORTH LGA, ENUGU STATE

Foreign Transaction For Dollars Payment :
Bank Name: GTBank
Branch Location: Enugu State,Nigeria.
Account Name: Chi E-Concept Int’l
 Account Number:  0117780667. 
Swift Code: GTBINGLA 
Dollar conversion rate for Naira is 175 per dollar. 

ATM CARD:  YOU CAN ALSO MAKE PAYMENT USING YOUR ATM CARD OR ONLINE TRANSFER. PLEASE CONTACT YOUR BANK SECURITY FOR GUIDE ON HOW TO TRANSFER MONEY TO OTHER BANKS USING YOUR ATM CARD. ATM CARD OR ONLINE BANK TRANSFER IS FASTER FOR QUICK DELIVERY TO YOUR EMAIL . OUR MARKETER WILL RESPOND TO YOU ANY TIME OF THE DAY. WE SUPPORT CBN CASHLESS SOCIETY. 

OR
PAY ONLINE USING YOUR ATM CARD. IT IS SECURED AND RELIABLE.

form>DELIVERY PERIOD FOR BANK PAYMENT IS  LESS THAN 24 HOURS

CALL OUR  CUSTOMERS CARE  OKEKE CHIDI C ON :  08074466939,08063386834.

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DIVIDEND POLICIES

(A CASE STUDY OF SOME QUOTED COMPANIES LISTED IN NIGERIA STOCK EXCHANGING)

ABSTRACT

Divided policy is an instrument use by the management of a company to respond the behavioural pattern of the owner of shares i.e shareholder.  While divide is the portion or reaction of company’s profit that is distributed to the shareholders.  There are various method of divided policy depends on the policy of organization this is to say that dividend policy varies from one company to the other.  But there is common established fact with regards to the dividend policy.  Ti is purely an indoor management affair.

A lot has been said by some renowned theorists authors operators and regulators of the economy as regard to dividend policy and its effect on market value of shares.

Modigliani and Miller model a theorist postulate in their irrelevance theory that dividend has nothing to do with market value of shares based on assumption while of shares based on assumption while Walter’s and Gordon’s models are of relevant theory that a value of shares respond proportionality to the dividend trend. Gordon models goes further by testing his thesis by way of econometric equation to substantiate his argument likewise efficient market hypotheses (E.M.H) shows how the forces of demand and supply dictates the value of shares in relations to dividend policy and the problem encounter in random walk.

Though the research work reveal other factor that is to be considered to determine the value of shares like investment opportunity viability of the company and strength.

This research work was carried out using two companies as a case study with their five years financial statement.  This enable us to critically establish the real effect of dividend on market value of shores from one company to the other and econometric equation of Gordon’s model was used to analyze the data by way of matrix

CHAPTER ONE

1.1            Introduction

• Statements of problem.
• Objective of the study
• Hypotheses
• Significance of the study
• Scope of the study
• Limitation of the study
• Definition of terms

CHAPTER TWO

• Literature review
• Introduction
• Models of shares valuation
• Summary of the chapter

 

CHAPTER THREE

• Research design and methodology
• Characteristics of population of study
• Sample and sampling procedure
• Data collections and processing procedure
• Instrument for data collection

 

CHAPTER FOUR

• Presentation and analysis of data

4.2     Introduction

4.3     Data presentation

• Data analysis
• Test of hypotheses
• Summary

CHAPTER FIVE

• Summary of findings conclusion and recommendation
• Findings
• Conclusion
• Recommendation

 

CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY

Dividend policies decision is concerned with the determination of the corporate earnings that is generated through the successful operation of the company in a financial year, which is to distribute among the key players that ensure the realization of the successful outcome of he operation of the organization and the amount of the proportion of this earnings to be retained.

Dividend earnings decision policy is widely considered in   the business world as strategic in corporate finance as    well as corporate performance and growth. Dividend policy directly influences the behavioural pattern of the investor ie. Shareholders.  Because the purchaser of the company i.e shareholder actually buys a dividend expectation; because of the dividend policy decision implication on the behavioural pattern of the shareholder be it positive or negative the corporate world impose the responsibility of this great task of he board room affairs.

Dividend policy decision as a tool in the strategic corporate finance as well corporate performance and growth affect the share price as well as cost of capital.  In other words on option dividend policy is the policy that maximizes the wealth of shareholder.

Due to obvious reasons shareholders consider impotence to dividend. The importance that the individual shareholder places on dividends depends on his level of wealth and preference for capital gains amongst others. In an environment with progressive personnel income taxes the individual with more wealth will tend to profess capital appreciation on shares then dividend. At a lower level of income the capital gain tax rate is higher then the personal income tax rates however the reverse is the case with increased income. The wealthy individual among the diverse shareholders may then prefer capital appreciation on his share due to the at mentioned reasons.

Though the bulk of he shareholder nay not be in this category the company is then placed in a situation of reconciling the difference or taking the potion that seems more favovrable to the company.  This is ht some things as saying that the management of the company will take the option that optimizes the value of he company’s shares.

It is often claimed that the company’s investment decisions and dividend decision are independent of the shareholder’s decision.  It should be noted that this might not be entirely true some there is replay procedures that protected the aggrieved shareholders.

Beside these the shareholders might exercises their right through the selling of their shares on the stock exchange and this has negative consequences on the value of the company’s share in the market which in turn affect the fortune of he company.

The primary aim of this research work is to find out whether the in dividend pays out stimulates responses on shares value.  It is believes in some garters that the dividend pay out has something to do with value of shares yet some people stated otherwise.  Dividend in this content means the amount distributed to shareholders of a company by way of return investment that are not so interested in the measure of soundless of he company.  This issue is even more pronounced when criticism that are normally levied against accounting measure of profitability are mentioned.

There are many criticisms regarding the measure of profitability in the accounting sense.  E.g. profit measurement by accountant depends on the assumption and policies used.  Hence the ability of he company to pay dividend can be stated to measure the sounded and profitability of a company.

 

• STATEMENT OF PROBLEM

Though dividend policies decision is guided by legal framework as prescription in the company and allied matters decree  (CAMD) of 1990 as to what constitute dividend in the corporate rate earning and the method in which the dividend policies decision can be taken.

Although there are many   constraints inherent in dividend policies research work reveals other factors to be considered in order to determine and study will only concern on two opposing view or argument associated with dividends policy decision.

These arguments can be highlighted as thus:

1. IRRELEVANT ARGUMENT/ SCHOOL OF THOUGHT

This posted that given the investment decision of the firm the dividend pay out is a merely details that dividends policies does not affect the wealth of the shareholders that is it is of need.

1. RELEVANT ARGUMENT

Posited that high tax payer prefer low dividend yield while institutional investor who do not pay tax prefer high yield or profit

• OBJECTIVE OF THE STUDY

The objective of he study include the following:

1. To analyze the basic models of share valuation with a view to answering such question as what are their simikritics and difference what is the extent to which dividend payout affect the value of shares of source listed companies etc.
2. To determine whether Education in dividend have anything to do with the value of shares.

• To show whether any of the shares valuation models cannot with reality

 

• STATEMENT OF THE HYPOTHESIS

An hypotheses is a statement of fact to study put forward by a researcher as a starting point for reasoning to guide him in human research work which may be true or false valid or otherwise if he data collected by the research indicated that majority support the fact that is valid it is therefore accepted otherwise it is not and hence rejected for the purpose of this research of study the major hypothesis considered are.

H0:    Fluctuation in dividend payout by some listed companies has effect on the value of shares.

H1:    Fluctuation in dividend payout by some listed companies has no effect on the value of shares.

 

• SIGNIFICANCE OF THE STUDY

The research work is intended to be of food use to anybody involved in the process of dividend payments and receipt.  For example companies management and investor.  The study by analyzing some dividend share valuation models intention show the logic behind these modems.

There is no doubt that some shareholders will be expecting high dividend some might be different and source even prefer no dividend situation. In fact some attend annual (general) meeting (ACM) in other to know the actual dividend declare for the year.

However it is beneficial to the companies in the policy making such as follows.

1. It enhance the image the organization e.g financial soundness
2. It will attract investors

• Increase market shores prices

1. Room for expansion
2. It increase and enabling the sources for fund in the capital market.

The study will be reference sources to future researchers

 

• SCOPE OF THE STUDY

As a result of the fact that the possibility of obtaining internal information is very remote data analysis will be restricted to facts obtained from listed company’s published financial statement and stock exchange daily official lists.

The study looks at the patterns of some shares before dividends are declared and the behaviour of such shares to the public and investors as a whole.  This is with a view to identifying whether shores prices respond to dividend declaration and payout.

The day in which dividend are approved for payment by the shareholders at the annual general meeting is assumed to be the day that such dividends are declared and the day when dividend warrants are posted to respective shareholder is regarded as the payout day.

 

 

• LIMITATION OF STUDY

This study will concern itself with situation in the stock market as they relate to the year 1998 1999 2001, 2002.

The research work will limit itself to only principles of dividends terms and abbreviations as they effect the scope of shoes value.

 

• DEFINITION OF TERM

1. P.S (earning per shore) this is the profit after tax of a company dividend by the number of shores in issued and ranking for dividend.
2. Profit after tax: That is number of shores in issued and ranking for dividend

• Price earning ratio: It shows the ratio of earning to the market value of shores.

1. Interim dividend: This is a dividend a company prior the end of its financial year.
2. Pay out ratio: This is the proportion of total earning (after tax) that is distributed as dividends.
3. Mm: Modigiliani and Miller: There are two professors of finance who made extensive research on dividend policy and capital structure.

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