ABSTRACT
The emergence of financial management as a major contributor to the analysis of investment and financing decisions has continues to respond to external economic and technical developments. The improvements in the efficiency and regulation of financial markets, has provided a better basis of the development for financial theory and its practical application.
This research work examine the impact of financial management strategies in the management of public enterprise with special reference to Nigeria National Petroleum Corporation (NNPC). The research investigates how the firm maximize stakeholders wealth; how the firm maximize profit and how the firm maximize stakeholders wealth and management.
Existing literatures on financial management were reviewed. The study also highlight the functions of financial manager, the links with financial environment and the nature of public enterprise.
A sample of fifteen (15) staff was sampled out of the entire population of NNPC for the analysis of the study. Data was garnered with the use of questionnaires administered to selected sample. The data were illustrated on tables and interpreted in percentage.
The study presents two hypotheses that were formulated based on the research questions. The hypotheses were tested with the use of Chi-Square analysis. The analysis resulted into rejecting the two null hypotheses. Based on the decision of the analysis, it was concluded that; Financial management plays a major role in a Public Sector and Public enterprises maximize stakeholders’ wealth for hypothesis one and two. Conclusion was drawn based on this judgment and recommendations were made to both firm of study and other firms operating in Nigeria.
CHAPTER ONE
INTRODUCTION
1.1 INTRODUCTION
Raising and utilizing funds efficiently and effectively has been a major source of concern to all financial managers both in the corporate World and Public Sector all over the world. The prime purpose of esstablishing a firm is to ensure that returns will not only be sufficient to meet the cost of funds but also enough to satisfy the wealth of maximization objective of the firm, thus, raising finance for corporate bodies has become important.
Financial management can thus, be described as the management planning and controlling of financial resources of a business to achieve the objectives of the business. It has long been considered as a branch of Economics but in the early 20th century it emerged as a separate discipline. It can also be defined as the identification of the possible strategies capable of maximizing an organization Net Present Value, the allocation of scarce resources among the competing opportunities, and the implementation and monitoring of the chosen strategy so as to achieve stated objectives.
Financial management as a subject is of growing interest to both academics and financial manages. On its emergence, it dealt with only the instruments, institutions and procedures in the capital market it later dealt with keeping records and reports, establishing funds (external financing) monitoring cash position and paying bills. It also deals with the concepts, assumptions, principle and techniques underlying the major financial decisions of the enterprises financial management connotes responsibility for obtaining and effectively utilizing the funds necessary for the efficient operation of an enterprise. The finance function Centre around the management of funds, raising and using them effectively. It therefore covers all functions concerned in attempting to ensure that financial resources are obtained and used in the most effective way to secure attainment of the objectives of the organization.
It provides the background for though understanding of the nature, theories and critical issues relating to modern financial management. It thus serves as a necessary background to a more advanced treatment of the investment financial decision.
Financial management today now includes a rigorous analysis of investment of organization's funds in assessing and obtaining the best mix of financial and dividend in relation to overall market valuation of a firm.
The field is still changing with ideas and techniques. The historical background of the company under review is thus: Nigeria National Petroleum Company (NNPC) was established on April 1977 under the statutory instrument Decree No. 33 of the same year by a merger of the Nigeria National Oil Corporation operational functions and the Ministry of Mines and Power with its regulating responsibility, this decree established NNPC, a public organization that would on behalf of government adequately manage all government interest in the Nigeria oil industry.
In addition to its expiration activities, the corporation was given powers and operational interest in refining petrochemicals and products transportation as well as marketing. Between 1978 and 1989, NNPC constructed refineries in Warri, Kaduna and Port Harcourt and took over 35,000 barrel shell refinery established in Port Harcourt in 1965.
In 1988, the NNPC was commercialized into 12 strategic business units covering the entire spectrum of oil industry operations; exploration and production gas development, refining, distribution, petrochemical engineering and commercial investment. The subsidiary companies include:
i. National Petroleum Investment Management Services (NAPISMS)
ii. Nigeria Petroleum Development Company (NPDC)
iii. The Nigerian Gas Company (NGC)
iv. The Products and Pipelines Marketing Company (PPMC)
v. Integrated Data Services Limited (DSL)
vi. Nigeria LNG Limited (NLNGN)
.