THE IMPACT OF WORKING CAPITAL MANAGEMENT OF THE PRODUCTIVITY OF A MANUFACTURING COMPANY
CHAPTER ONE
INTERODUCTION
1.1 BACKGROUND OF THE STUDY
Business organizations exist in a rapidly changing environment which threatens their survival. Many of them have adopted various survival strategies to maintain substance. Hence, this has become the central philosophy of most business concern for a business to survival, it must make sustained profit so as to experience growth and meet its obligation when they fall due and ensure that the company does not run of working capital management and its effect on the portability of manufacturing companies. Its aim is to bring focus of this work, which borders on the importance of working capital management and its effect on the profitability of manufacturing companies.
Most manufacturing companies have been making tremendous effort capital. This primary is reposed on adequate recognition by financial experts of the importance of maintaining an optimum level of working capital and also obviates the claim that greater importance is attached to profitability than the management of working capital.
Working capital refers to the firm’s commitment in current assets. Current assets are made up of cash and near items like debtors, stock, marketable securities etc. in other words they are assets which are immediately convertible into cash or can be converted within a short period of say one year. The above description refers to the gross working capital. On the other hand, net working capital refers to the total current liabilities
1.2 STATEMENT OF THE PROBLEM
It is an obviously truth that working capital management is a global one, there is a problem confronting both big and small entities, even the government is involved in this great concern. The problem at stake is to identify the difficulties encountered by a manufacturing company on realizing that profit is made at the expenses of running an efficient would be analyzed, the identified problems and useful suggestion offered.
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