Effect Of Credit Management On The Performance Of Manufacturing Companies In Nigeria (A Study Of Nigerian Breweries Plc)

ABSTRACT

This study appraises  the effect of credit management on the performance  of manufacturing companies in Nigeria (a study of selected companies in Nigeria). The researcher adopted longitudinal research design for  the study.  The study employed secondary data in its analysis, while data were extracted from  the annual  reports  of  Nigerian  Breweries  Pie,   ranging from   1997-2016.    The variables used were, credit management as the independent variable,  while the dependent variables were PAT, ROA and ROE. A simple regression technique was  adopted  in  the  analysis  of data.   The study  established  a positive  and significant  relationship  between  credit management  and the performance  of manufacturing companies in Nigeria. Other findings  were; the effect of credit management on profit after tax (PAT) of manufacturing companies in Nigeria is significant while a negative significant effect were established between    credit management  and  returns  on  asset  (ROA) and  returns  on  equity  (ROE)  of manufacturing companies in Nigeria. The study recommends among other things that, Managers of manufacturing firms should maintain their current policies of other non-current receivables, trade and other receivables as well as cash and bank in other to maintain their current profit margin or even increase it.

Cover page 

Title  page 

Declaration 

Certification 

Dedication

 Acknowledgements 

Table of Contents 

List of Tables

Abstract

TABLE  OF CONTENTS

CHAPTER ONE: INTRODUCTION

1.1 Background  to the Study ﾿

1.2 Statement  of the Problem ﾿ 2

1.3 Objectives  to the Study ﾿ 3

1.4 Research  Questions ﾿ 3

1.5 Research  of Hypotheses ﾿ 4

1.6 Significance  of the Study ﾿ 4

1. 7 Scope of the Study ﾿ 5

1.8 Limitations  of the Study ﾿ 6

CHAPTER TWO:  LITERATURE REVIEW ﾿

2.1.0 Conceptual  Framework ﾿ 7

2 .1.1       Meaning  of Credit Management ﾿ 7

2.1.2 Concept  of Credits  Sales

2.1.3 Relationship  between  Working  Capital  and the ﾿

Operating ﾿

Cycle ﾿ 8

9

Operating  Cycle of a Manufacturing   Company ﾿ 10

2.1.5    Reasons  for Granting  Credit ﾿ 10

2.1.6  Effective  and Efficient  Credit Policy ﾿ 11

2.1.7   Concept  of Credit Analyses                                                                              13

2.1.8  Determination   of Credit Worthiness                                                                  14

2.1.9   A Sound Credit Management  Policy                                                               15

2.1.10     Credit  Terms                                                                                                    17

2.1.11     Collection  Policy  and Procedures                                                                  17

2.1.12     Factoring  and Pledging  of Debtors Accounts                                               18

2.1.13   Business  Performance                                                                                     19

2.1.14   Concept  of Profitability                                                                                   19

2.2 Theoretical  frame work                                                                                         25

2.2.1   Pecking  Order Theory  Liquidity                                                                     25

2.2.2 Trade  Off Theory  Liquidity                                                                               26

2.2.3    Clerk Theory  of Profitability                                                                           29

2.3      Empirical  Review                                                                                              29

CHAPTER  THREE:  RESEARCH   METHODOLOGY

3. I  Research Design ﾿

3 .2  Population of study ﾿ 34

3 .3 Sample Size and Sampling Techniques ﾿ 34

3.4 Method of Data Collection ﾿ 34

3.5 Validity and Reliability ﾿ 35

3.6    Description of Variables                                                                              35

3.7 Method of Data Analysis

CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA ﾿ 35

4.1 Presentation of Data ﾿ 39

4.2  Analysis of Data ﾿ 41

4.3 Discussion of Model and Test of Hypothesis ﾿ 42

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1  Summary of Findings ﾿ 47

5 .2  Conclusion ﾿ 48

5 .3  Recommendations ﾿ 49

References ﾿ 50

Appendix ﾿ 52