ABSTRACT

Ibis research study investigates the effect of working capital management on profitability in a manufacturing company. PZ Cussons Industries Plc, a manufacturing company whose nature of business is manufacturing and sale of consumer products is used as case study for the purpose of this research study. It seeks to determine the effect of working capital management on profitability of manufacturing companies, evaluate ii adequate inventory management techniques are employed for smooth running of the company, examine whether adequate working management which if judiciously followed will lead to operation cost reduction as profit is said to be maximum when cost is minimum. The study bids to explore what problems arc encountered by management in their application of working capital in the enterprise, and whether the employees in manufacturing companies hve the basic skills and knowledge of working capital management. This study is significance as it will form a reservoir of instruction to enable managers compare the procedure in their companies and make necessary adjustments, benefit potential researchers who wish to carry on further studies on the topic, as well as provide direction to such scholars, and also serve as a source of secondary data for such studies. Business students managers, and even teachers will also benefit immensely from the report of the study as it will refresh their memories in the procedures for effective working capital management. For the first hypotheses formulated for the purpose of this study, Profitability and Working Capital Ratio were used as variables as Regression Analysis ' as employed in the study as secondary data were used for the analysis. The analysis of the second and third hypothesis was carried out using chi-square statistical analysis, as the variables involved which include smooth running of the company, and reduction in operational cost in the company were qualitative data variables. From the analyses carried out in this study, it was revealed that: Economic inflation and delay paymet for goods bought on credit by customers are among the problems management face in the application of working capital in manufacturing companies; not all the employees in nianufacturing companies have the basic skil Is and knowledge of working capital management; manufacturing companies that apply proper working capital management earn higher profit than companies which do not apply pp' working capital management; there exists a positive relationship between working capital management and the total performance of' a manufacturing company; the operational cost of a manufacturing company is reduced when working capital management is judiciously applied; the inventory technique to be adopted in a manufacturing company depends on the situation at a particular period. Fol lowing the findings, the researcher conclusions that; manufacturing companies with maximization of' profit as a major objective would employ proper working capital management in the running of the company; the smooth running of a manufacturing company is not solely dependent on the inventory management technique adopted by the company, there are other factors which have stronger effect on the smooth running of a manufacturing company: working capital management is a very important factor for the reduction of' operational cost in a manufacturing company; manufacturing companies are not rigid with the inventory management technique to be adopted in the controlling of inventory; the sittiatioll at hand such as demand hiom customers, economic condition, etc may determine

which inventory technique that plays. It is therefore recommended that: proper working capital

management should be adopted in the manufacturing companies so as to ensure adequate pi-ofitability

which will ensure the on-going of' the company, as well as strengthen the trust of shareholders of' the

company on the management (as dividend is paid out of' profit generated by the company); working

capital management (decisions) should be undertaken by employees (managers) with adequate working

capital knowledge, so as to ensure decisions that will yield expected returns; management of

manufacturing companies should accommodate yearly or half yearly working capital management

training for the employees in (lie company's activities, o as to ensure that every staff of the company has

the skills and knowledge of working c'ipital management for a better organizational performance.