THE IMPACT OF FUNGIBILITY AND CASH MANAGEMENT IN ENSURING PRODUCTIVITY IN BREWING INDUSTRY (A STUDY OF CHAMPION BREWERIES PLC, UYO)

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THE IMPACT OF FUNGIBILITY AND CASH MANAGEMENT IN ENSURING PRODUCTIVITY IN BREWING INDUSTRY (A STUDY OF CHAMPION BREWERIES PLC, UYO)

TABLE OF CONTENTS

Contents                                                                 Pages

Cover page      —     –      —     –      –      –      –      –       –      i

Title page        –      –      –      –      –      –      –      –       –      ii

Certification    –      –      –      –      –      –      –      –       –      iii

Dedication       —     —     –      –      –      –      –      –       –      iv

Acknowledgements  –      –      –      –      –      –      –       –      v

Abstract   –      –      –      –      –      –      –      –      –       –      vii

Table of content      –      –      –      –      –      –      –       –      viii

CHAPTER ONE – INTRODUCTION

1.1   Background of the study –      –      —     –      –       –      1

1.2   Statement of the problem       –      –      –      –       –      3

1.3   Objectives of the study   –      –      –      –      –       –      5

1.4   Research Questions        –      –      –      –      –       –      –      6

1.5   Significance of the study –      –      –      –      –       –      7

1.6   Scope of the study  –      –      –      –      –      –       –      8

1.7   Limitation of the study    –      –      –      –      –       –      9

1.8   Definitions of terms and acronyms –      –      –       –      10

CHAPTER TWO – REVIEW OF RELATED LITERATURE

2.1 Definition of Fungibility     –      –      –      –      –       –      13

2.2 Fungibility Ratio for Performance Measurement       –      –      15

  • Constraint and Impact on Fungibility –      –       –      –      16
  • Theoretical Framework –      –      –      –      –       –      19

2.5 Definition and Meaning of Productivity     –      –       –      25

2.6 Productivity Ratio for Performance Measurement       –      27

2.7   Construction and Impact on Productivity Optimization    29

2.8 Cash Management    –      –      –      –      –      –       –      32

CHAPTER THREE – RESEARCH METHODOLOGY

3.1   Introduction    –      –      –      –      –      –      –       –      38

3.2   Research Design    –      –      –      –      –      –       –      38

3.3   Area of the Study    –      –      –      –      –      –       –      39

3.4   Population       –      –      –      –      –      –      –       –      39

3.5   Source of Data Collection       –      –      –      –       –      40

3.6   Method of Data Collection       –      –      –      –       –      40

3.7 Method of Data Analysis   –      –      –      –      –       –      41

CHAPTER FOUR – DATA PRESENTATION AND ANALYSIS

4.0   Introduction    –      –      –      –      –      –      –       –      42

4.1 Questionnaire Distribution –      –      –      –      –       –      42

4.2   Data Presentation and Analysis of the Responses of the Various Department     –      –      –       –      —     –      –      43

4.3 Research   Hypothesis      –      –      –      –      –       –      47

4.4   Summary of   Findings           –      –      –      –       –      –      48

CHAPTER FIVE – SUMMARY, CONCLUSION, RECOMMENDATION

5.1   Introduction    –      –      –      –      –      –      –       –      50

5.2   Summary –      –      –      –      –      –      –      –       –      50

5.3   Conclusion      –      –      –      –      –      –      –       –      51

5.4   Recommendation    –      –      –      –      –      –       –      52

References

Appendices

CHAPTER ONE

1.1  INTRODUCTION

The success of any business today is largely determined by the fungibility position and the way in which it manage its cash to ensure productivity. Solomon (2002) as the main purpose of establishing business is to make profit and not only to make profit but to optimize it therefore all necessary factors responsible for  such should be controlled and manage in order to achieve the objective (2001).

Fungibility position of breweries could be considered in terms of cash and cash equivalent; loans advance prepayment, debtors, creditors etc, which could be readily ascertained to meet up with the financial obligation of breweries in short term and long term (2003).

Abonede (2004) idle cash which some could refers to as surplus reserves and which could be also seen as part of the fungibility of a company could be used in such a way that it will make profit to accrue to it, therefore adequate care should be taken in the aspect of managing cash Lucey (2003). There is a cost involved in maintaining a balanced fungibility position. This is especially so where the interest rate is low and credit demand is sluggish however, those cost can be minimized through the use of spread management when interest rate and credit demand are increasing a balance fungibility can be very profitable because fungibility is available to meet the loan demand maintaining a balance productivity. Joseph (1971).

John (1998) argue that by management his fungibility position a breweries may be able to afford the cost that often accompany an excess as well as deficit fungibility position. In addition it can display to regulatory as well as investors a logical controlled method of ensuring that the need of the community and the asset of the shareholders are being well managed. It can be reasonably inference quoted above that there exist on important relationship between the concept of fungibility and productivity.

Efficiency in breweriess in terms of fungibility and productivity could be measure through trend analysis and ratio analysis. Some of the ratio includes capitals adequacy asset utilization productivity, fungibility, and cash flow ratio.

A proper consideration and analysis of this will give us a base for determining the best position for fungibility and cash management to ensure productivity in brewing industry. Aborede (2004).

 1.2  STATEMENT OF THE PROBLEM

Through these financial roles, the commercial breweries use the idle funds in other classes of financial assets investment. These business activities of the breweries is not done without problem facing it, since these deposit which have been invested by the breweries for profit maximization can be demanded for at any time. When the breweries is not able to meet their financial obligations, the public begins to loss confidence and these will cause a lot of competition to the financial sector. With the high increase of competition in the brewing industry, every commercial breweries should strive to operate on profit and at the same time meet the financial demand of its depositors by maintaining adequate fungibility. The problem then becomes how to select the optimum point at which commercial breweries can maintain its assets in order to optimize these two objectives. These problems become more difficult as a large numbers of breweries are basically engaged with profit maximization and tend to neglect the importance of fungibility management and these can lead to technical and legal insolvency.

This research work will also see to other problems such as the impact of excess fungibility and the problem of estimating the population of the deposits that can be demanded for at any specific time, selection of factors that will affect or influence the breweries fungibility level and finally problem of satisfying the two major publics of the commercial breweries simultaneously. With these solutions will be prescribe and recommendations will be made where necessary.

 1.3  OBJECTIVE OF THE STUDY

The competition environment of the financial institutions is to tense that any commercial breweries that aims to survive must be aware of the challenges of its fungibility and productivity obligation as both variable can make or destroy its future.

This study is largely centered on fungibility objective and ensure its ability to meet up the depositors demand thereby maximizing its value and there is also uncertainties in the asset management of the commercial breweries as the new deposit does not correspond with the customer’s withdrawals, since demand is made at short notice. Therefore this study is aimed at the following goals.

  • To know fungibility management will handle these uncertainties and determine their impact on productivity.
  • Discovering the specific factors that are useful in improving productivity and fungibility position of the commercial breweries.
  • To examine the cost of fungibility and ilfungibility levels at the performance of commercial breweries and length at which this fungibility can be used as competitive instruments.
  • To take a critical view of the adopted fungibility measures of the commercials breweries and attempt to see how it has achieved.
  • Finding out the impact of changes in fungibility levels on productivity.
  • Aimed at discovering the credit and portfolio policies of the commercials breweries.
  • Finally it will attempt to identify the basic causes of fungibility problems in Nigeria commercial breweries and to recommend appropriate measures to solve such problems.

 1.5  RESEARCH QUESTIONS

Based on the study the following research questions are asked:

  1. Is optimal fungibility in Champion Breweries Plc constrained by robust dividend policy?
  2. Is optimal fungibility in Champion Breweries Plc constrained by excess fixed asset acquirement?
  3. Is optimal profit in Champion Breweries Plc constrained by idle cash availability?
  4. Is optimal profit in Champion Breweries Plc constrained by love productivity of staff?
  5. Is optimal profit in Champion Breweries Plc constrained by idle time-man-hour losses?

Is optimal profit in Champion Breweries Plc constrained by wasteful fraudulence expenditure?

  THE IMPACT OF FUNGIBILITY AND CASH MANAGEMENT IN ENSURING PRODUCTIVITY IN BREWING INDUSTRY(A STUDY OF CHAMPION BREWERIES PLC, UYO)

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