The primary aim of establishing or going into business is to optimize profit and as well as to ensure continuity of that business concern. When one person (sole trader ) of group of person (partnership of companies limited by shares or guarantee) intends forming a business entity he will need both fixed and current assets to facilitate a smooth take off, these fixed and current assets will by funded from both long term liabilities and current liabilities (or capital) as the case may be.
On formation, the business as an entity will be provided with fixed assets, such as building and premises, plant and machinery. Equipments, motor van etc. But form all indication we know and we see that these fixed assets itemized above cannot achieve the aforesaid aims of establishing the business. This is so because the fixed assets where not bought for the purpose of resale as a result any project cannot be directly accruable from its continuous stay.
From the foregoing, it is easily deduceable from it that the business as a going concern need some indispensable items or factors that will determine its profitability and its ability to withstand the test of time in a prevalent competitive environment
These indispensable items are operational and resolving in contrast with fixed capital and this is what we termed as the “”working capital”.
ADEQUANCY OF WORKING CAPITAL
In our previous chapter, we were made to understand that excess of current asset over current liabilities, and that the working capital is an indispensable factor that will keep an organisation in operation. Since the working capital is the life – block of any business (ie it can determine the business profit ability, continuity, competitiveness etc.) it is imperative to have sufficient amount of it (working capital ) in any organisation that aspire to meet its primary aim of establishment
Arrangement of funds for financing working capital requirements should be made by the manager. Whenever there is a need for working capital, arrangement should be made quickly for it. Similarly, if surplus funds arise, they should not be allowed to remain idle, but should be invested in short term maturing securities. The financial manager should have knowledge of the sources of working capital funds as well as temporarily invested.
ADEQUACY OR INADEQUACY OF WORKING CAPITAL: ITS IMPORTANCE AND IMPLICATION.
INTRODUCTION The primary aim of establishing or going into business is to optimize profit and as well as to ensure continuity of that business concern. When one person (sole trader ) of group of person (partnership of companies limited by shares or guarantee) intends forming a business entity he will need both fixed and current assets to... Continue Reading
CHAPTER ONE INTRODUCTION The primary aim of establishing or going into business is to optimize profit and as well as to ensure continuity of that business concern. When one person (sole trader ) of group of person (partnership of companies limited by shares or guarantee)... Continue Reading
ABSTRACT The objective of this study is to evaluate and examine the adequacy or inadequacy of working capital: its importance and implication The study observed that A lot of financial institutions have failed and more may still fall due to inadequacy of working capital Because many financial institutions has quested or fallen some firms has will... Continue Reading
ABSTRACT This study is an attempt to critically examine the reliance of working capital in manufacturing organization and to highlight its various effects. The reason for embarking on this research is therefore to probe into the problem areas, objectives etc as well as making the necessary suggestions. However, the research work is divided into... Continue Reading
ABSTRACT The study examined capital adequacy and bank performance in the Nigerian banking industry. It sought to answer the following research questions: what is the relationship between capital adequacy ratios and return on asset? What is the relationship between Capital adequacy ratios and return... Continue Reading
ABSTRACT Management of working capital which aims at maintaining an optimal balance between each of the working capital components, that is, cash, receivables, inventory and payables is a fundamental part of the overall corporate strategy to create value and is an important source of competitive advantage in businesses (Deloof, 2003). The main... Continue Reading
A CASE STUDY OF NIGERIA BAG MANUFATURING COMPANY ABSTRACT This study examines the Management of Working Capital with special reference to Nigeria Bag Manufacturing Company. This study employs survey research design. Analytically, the research adopted descriptive statistics to examine the impact... Continue Reading
ABSTRACT Working capital is the ability of a business to meet its short-term liabilities as the full due out of its short-term assets. It is therefore necessary that an industry should always maintain a well-articulated and consistent management of its working capital. To facilitate the exposition... Continue Reading
ABSTRACT This study analyzes the impact of working capital management on firm’s performance in Nigeria for the period of 2006 – 20011. For this purpose, balanced panel data of 50 firms is used which are listed in the Nigerian Stock Exchange. Results were analyzed by using the OLS regression and... Continue Reading
(A CASE STUDY OF UNITED BANK FOR AFRICAN PLC LAGOS). ABSTRACT Working capital is known to be the background and life wire of any business organizations in every part of the world. This makes it imperative that there should be efficient working capital management, to help in reducing constant... Continue Reading