A CRITICAL APPRAISAL OF CURRENT ASSETS MANAGEMENT IN PUBLIC LIMITED LIABILITY COMPANIES (A CASE STUDY OF NIGERIAN BREWERIES)

CHAPTER ONE

INTRODUCTION

Background of the study

The advent of asset management is a prerequisite to organizational profitability and growth. The management of asset in public limited liability companies has a lot to do with their profitability and so extra caution has to be taken in the management appraisal of these assets to ensure evenness and profitability (Allen 2007).

Current assets as one of the management tolls of business organization are very important in the proper function of business and achievement of profitability of an organization.  Current assets are those assets that are readily without depreciation in value and interference in the normal process of the enterprise.  Management on the other hand involves getting things done either by oneself or through other people by planning, organizing and coordinating (Reid 2003).  It is also a social and technical proves that utilizes resources and changes human behaviors in the desired direction in order to elicit contribution that will accomplish the objectives of the organization.

Current asset management includes – managerial decisions on how the various component of current asset are to be financial as well as planned policies on the composition level to be maintained and control to be exercised(Bond 1998).   Current assets comprises of cash, inventories, governments bonds, account reachable mark able securities, prepaid expenses and also other assets that are capable of being converted into cash within a relatively short period without interfering with the normal operations of the business.  For an organizational goal to be achieved these components of current assets should be efficiently managed.

    But sundry debtors and cash tie-up investment funds can also have other costly disadvantages, for this reason, organizations should always seek to minimize or keep optimum stock and cash level of these assets and ideally reduce them to zero. However, reducing them to zero is rarely practical since to do so will result in cash greater of other adverse costs increased. The determination of the optional level for such assets is therefore the result of balancing process between the cost of holding such assets and role associated with not holding than or of holding only small amount.

  It is obvious that any mismanagement of these current assets will result to loss of cash, which will eventually have adverse effects in the entire management of the company(Caridad 2005).

Therefore, any step which can be taken to minimize levels of current assets probably yield large savings in cost. Investigations have shown that many business concerns fail or perform below expectations as a result of the inability to manage their current assets adequately (Bavin 1999).  The importance ofwell-coordinated current assets, management cannot be over-exaggerated; it goes a long way to boast productivity, availability of funds, profitability and encourages growth and expansion of the company.   The researcher therefore tend to investigate and be able to come out with a profitable result on effective and efficient management of current assets in public limited liability companies and suggest possible ways for further improvement.

Statement of the general problem

Most companies in Nigeria have had inconsistent and abysmal performance as a result of their inability to manage their current asset; this and a host of other inconsistencies may have led to the economic instability of Nigeria.

The rise in the wave of corruption which has crippled the socio economic development of Nigeria may actually be as a result of lack of efficient current asset management in public organizations, lack of adequate appraisals of an organization’s current asset could lead to lapse which could encourage fraud thereby affecting the profitability and growth of the organization.

Another difficulty encountered in management of current asset is debt managements of current asset is the problem of debt management both on the part of government and at the organizational level. The terms of credit, sales is no more maintained by distributors and this cases shortage of fund that would have this cause shortage of fund that would have been available for the normal operation of the origination. This entire   problem hinders the efficient management of current asset.

Significance of the study

A cardinal significance of this study would be to serve as an eye opener for captains of industries, project managers, researchers and all stakeholders on the need to ensure a critical appraisal of current asset management in public organizations.

This study would also be of immense importance to government in the formulation of economic policies and internal revenue template for sustainable socio economic development.

Aims and Objectives of the study

The study aims to achieve the following;

• The purpose of this study is to critically appraise the level at which the management makes policies for current assets administration in public limited labiality companies.
• To as certain how funds are really being civilized and adequate management of current assets with a view to finding solution to gross mismanagement in Nigeria.
• To identify reason why public limited liability companies engage in proper current asset management.
• To examine the extent to which current assets management tools have helped in the proper functioning of business and achievement of organizational goals and objectives.
• To identify the benefits of current asset management to the Nigerian economy by extension.
• To make recommendations and to prevent further lapses and recommend appropriate measures to be adopted in efficient current asset management in other to minimize waste.

Scope of the study

This study is restricted to the critical appraisal of current asset management in public limited liability companies with the Nigerian breweries plc as its case study.

Limitation of the study

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

Research Questions

This study would be guided by the following research questions

• Does the current asset management system in organizations helped to improve business growth and profitability?
• Has current management in public limited liability companies helped to reduce fraud and corruption in the system?
• Has the level of current asset management in public limited liability companies influenced the economy of the Nigeria?
• Has the government taken current asset management serious in the ministries, department and agencies (MDA) to minimize to waste?

Research Hypothesis

H0: there is no significant impact of current asset management on the profitability and growth of public limited liability companies

H1: there is a significant impact of current asset management on the profitability and growth of public limited liability companies.

Definition of terms

• Asset:An item of property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.
• Current asset: A balance sheet account that represents the value of all assets that can reasonably expected to be converted into cash within one year. Current assets include cash and cash equivalents, accounts receivable, inventory, marketable securities, prepaid expenses and other liquid assets that can be readily converted to cash.
• Organization:An organized group of people with a particular purpose, such as a business or government department.
• Government bonds:A government bond is a bond issued by a national government, generally with a promise to pay periodic interest payments and to repay the face value on the maturity date.Government bonds are usually denominated in the country's own currency.

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