Assessing working capital management on the financial performances (a case study of sunglass kaduna)

Project Abstract

This study aims to assess the impact of working capital management on the financial performance of Sunglass Kaduna, a retail business operating in Kaduna, Nigeria. Working capital management is a crucial aspect of financial management for businesses, as it directly impacts liquidity, profitability, and overall financial health. The research will utilize both quantitative and qualitative research methods to analyze the current working capital management practices of Sunglass Kaduna and their subsequent effects on financial performance. The study will focus on key components of working capital management, including accounts receivable management, inventory management, and accounts payable management. By examining these components, the research aims to identify areas of strength and weakness in Sunglass Kaduna's working capital management practices and provide recommendations for improvement. Through financial ratio analysis, the study will assess the liquidity, profitability, and efficiency of Sunglass Kaduna based on its working capital management. Key financial ratios such as the current ratio, quick ratio, inventory turnover ratio, and accounts receivable turnover ratio will be calculated and interpreted to provide insights into the business's financial performance. Additionally, qualitative data will be collected through interviews with management and employees of Sunglass Kaduna to gain a deeper understanding of the company's working capital management practices. These qualitative insights will complement the quantitative analysis and provide a comprehensive view of how working capital management impacts the daily operations and financial health of the business. The research findings are expected to contribute to the existing body of knowledge on working capital management and its effects on financial performance in the context of retail businesses in Nigeria. The recommendations derived from this study will be valuable for Sunglass Kaduna and other similar businesses looking to enhance their working capital management practices and improve overall financial performance. Overall, this research project aims to provide practical insights and recommendations that can help Sunglass Kaduna optimize its working capital management, strengthen its financial performance, and achieve long-term sustainability and growth in the competitive retail market of Kaduna, Nigeria.

Project Overview

<p> </p><p><strong>INTRODUCTION</strong></p><p><strong>1.1 &nbsp; &nbsp; &nbsp; Background to the Study</strong></p><p>No matter the amount of money spent on equipment, plant and machinery, building etc. if the ingredient for production are not efficiently managed the entire amount committed will become a waste. As essential as these are without working capital there is going to be a set back.</p><p>Aminu (2003) defines working capital as a firms investment in short term assets that is cash account receivable, short term or marketable securities and inventories similar Philip (2001) sees working capital as items that are required for day to day production of goods (services) to be sold by a firm. </p><p>Philip (2001) stated that working capital management refers to a process of all aspect of the administrations of both current assets and current liabilities. He also explains that it is a process of planning, directing, controlling and decision making over working capital to achieve the aims and objectives of the company. Philip (2001) defines management as a process of planning, directing, controlling and decision making in order to achieve the aims. &nbsp;</p><p>Finance is a broad term that describes two related activities, the study of how money is managed and the actual process acquiring needed funds, while Don (2012) defined finance as a field that deals with the study of investment that includes the dynamics of assets and liabilities over time under conditions of different degree of uncertainty and risk.</p><p>The availability of working capital is an important factor to be consider as it is a pivot upon which the life of the firm revolves. But more importantly it is the ability of the manager to harness the components of working capital to bring about consistency in the success and growth of the firm. The efficiency and effectiveness of the management of this vital ingredient is a determining factor of the company’s community in business.</p><p><strong>1.2 &nbsp; &nbsp; &nbsp; Statement of the Problem</strong></p><p>It is an established fact that no matter how an organization is well equipped with both machines and human resources without the necessary working capital management operating the business will be difficult and the organization will not be able to produce goods and services. Working capital plays a very important role in the success of any organization especially in a manufacturing concern. In a period when there is surplus cash flow in an organization, the effect of working capital may not be notified and this is not always obtained in many organizations. Philip (2001) observed that poor management of working capital in business often leads to low profits and lack of capital investment structure (short and long term). With the present global economic recession, increasing interest rate and therefore it is necessary to assess the working capital management on the financial performance in sunglass Kaduna.</p><p><strong>1.3 &nbsp; &nbsp; &nbsp; Objectives of the Study</strong></p><p>The study would attempt to achieve the following objectives</p><p>i) &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; To analyze the sources of working capital for sunglass limited &nbsp;</p><p>ii) &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; to identify the relevance of working capital to operational performance </p><p>iii) &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; To identify the components of working capital of sunglass limited</p><p>iv) &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; To assess the working capital management on financial performance of sunglass limited</p><p>The following questions are formulated to guide the study</p><p>(i) &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; What are the relevance of working capital to the manufacturing company</p><p>(ii) &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; How can we asses the working capital management on financial performance in sunglass limited Kaduna?</p><p><strong>1.4 &nbsp; &nbsp; &nbsp; &nbsp; Significance of the Study</strong></p><p>The significance of the study are as follows:</p><p>i. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Individuals who will have any opportunity to have company on his/her own to serve as a guide in his/her working capital management based on financial record.</p><p>ii. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Serve as a reservoir of knowledge and secondary data for students companies or other interested individuals or group who may embark on research on related topic in the future</p><p>iii. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; The research will be of great help to the management of Sunglass Limited to trace areas of weakness and possible corrective actions to be taken as to avert similar failure in the future. &nbsp;</p><p><strong>1.5 &nbsp; &nbsp; &nbsp; Scope of the Study</strong></p><p>This study will be limited to assess the working capital of management on the financial performances of sunglass limited Kaduna, and the study will not cover the production capacity, but only on working capital on the financial performance.</p> <br><p></p>