CHAPTER ONE
- INTRODUCTION
In this capital such areas like background of the study would be looked into, it is divided into these sub-headings such as statement of problem, purpose of the study, scope of the study of the study research hypothesis, significance of the study limitation of study and definition of terms.
1.1 BACKGROUND OF THE STUDY
The viability of an organization can be enhanced through effective and efficient management of the firms working capital, working capital management has variously been defined by authors and professional as the capital which can readily turned into each for payment of the day to day expenses of the firms.
The need for financial resources are limited and costly and even where it is available, the scope into which we could be applied and diverse.
A business that is just about to start production needs a fixed assets and adequate working capital to pay staff salaries, wages and other administrative expenses.
The need for good management of capital should be the most important aspect of a firms over all financial management. This is because efficiency in this area of financial management as necessary to ensure the firms long term success and to achieve its overall goals which is maximization of owner’s wealth. Working capital has also defined by western brigham’s as a firms investment in short term asset each short term securities, account recruable and inventories” from the foregoing working capital management refers to all aspects of the administration of both current assets and current liabilities.
- THE NEED FOR THE STUDY
The need for the study is to run day- to –day business activities cannot be over emphasized. We will hardly find a business firm which does not require any amount of working capital, indeed, firm differs in their requirement of working capital. We know that firms aim at maximizing the result of shareholders. In its endeavour to maximize shareholders wealth, the firm should corn sufficient return requirement successful sales activity. The firm has to invest enough founds in current assets for the sales do not convert into cash instantly. In as much as a firm need adequate working capital to run its business operation it should keep watch over situation that could lead to both excessive and in adequate working capital position sincere that could be dangerous from the firm’s point of view.