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Format: MS WORD
| Chapters: 1-5
| Pages: 72
THE EFFECTIVE FINANCIAL MANAGEMENT AS A TOOL FOR ASSESSING EFFICIENCY AND GROWTH IN ORGANIZATION
CHAPTER ONE
INTRODUCTION
Finance is one of the most essential aspects of business management. As asserted by wikipedia.org, finance is the science of funds management. The establishment of a good business plan, with the best and proper set of human resources and equipment is not result oriented without effective management of the organization's fund. It is a known and acceptable fact that effective financial management is the only key to organization success: without proper financial management, organization is unlikely to succeed. This is because organization depends on its finance to make appropriate investment production, administration and retain human capital Wikipedia.org states that managing money is essential to ensure a second future for the organization. The concept of financial management - been reviewed and discuss by many scholars in the field.
Neave-and Wiginton (1981') states financial management goal and principal task are raising finance capital to invest in productive enterprises with a view to maximize the value of the owner's investment. Furthermore the primary objective of financial management is to maximize financial and economic benefits from an investment. Financial management from the researcher's point of view is the task of balancing risk and profitability, while attempting to maximize an organization wealth and value of stock. From the foregoing, the success and survival of every organization depend solely on the effective utilization of funds at its disposal to achieve organization goal while maximizing profit
1.1 BACKGROUND TO THE STUDY
The First Bank Plc was established in 1894. Head quartered in marina, street Lagos the Bank has an international presence through its subsidiary FBN Bank (UK) in London and Paris and its offices in Johannesburg and Beijing with about 1.3 million shareholders across the countries. First Bank is quoted on the Nigerian stock exchange and has an unlisted Global depository receipt (GDR) programme. The Bank provides a comprehensive range of retail and corporate solutions and through its subsidiaries contributes to national development in capital market operations, insurance brokerage, bureau de change, private equity/venture capital, pension funds management, registrarship, trusteeship, mortgages and micro-finance.
Retrospectively, the past experience of dependable service, the Bank continued to strength its relationship with customers consolidating alliances with key sectors that have been strategized to the well being and of Nigeria. First Bank, inarguably the country's most diversified financial service group serves more than 4.2 million customers through 536 locations in Nigeria. Since Banks are the main facilitator of funding through provision of credit, the Bank financial funds (investment) need to be managed carefully with priority attention to balancing the financial risk and profitability. With the advent of numerous bank facilities such as APG bond, LC abridge facilities etc which on the surface seems attractive but risk prone, the financial institutions come to the realization that to succeed in this precarious business environment requires effective planning, budgeting, forecasting, procurement, disbursement and control, of its funds. Financial management comprises evaluation/appraisal of investment portfolio, working capital management, cash management etc. The concept of realizing organizational growth has been related to effective financial management. This is because profitability which is the end result off financial management has to do with:
i. increase organization stock worth
ii. maximize shareholders funds
iii. retain best crop of human resources
iv. guarantees future investment etc
In the absence of fund, the organization does nothing but fall since the financial obligation could no longer be met.
1.2 STATEMENT OF THE PROBLEM
Effective financial management was seen as the only means of pulling Bankers off their doom occasioned by the Banking reform era. The Bank reform era spelt doom and unpleasant surprises to most Bankers as their sharp practice of trading in foreign exchange, treasury bills, opening of fictitious credit and over dependence on government deposits were cancelled. They were compelled to revert back to the core banking activities which is savings and intermediation. This trend puns bankers out their complacency and thwarts the relative peace they enjoyed. As a result of the challenge posed by this remarkable change, Bankers now realized that effective financial management is the only means of surviving in the competitive environment with mega Banks and requirement of transparency
1.3 PURPOSE OF THE STUDY
The primary purpose of this research work is to unveil the factors that are responsible for the failure of business. This includes:
i. To identify the importance and the role that finance plays in
business growth in First Bank PIc.
ii. To identify, various area and how to evaluate a business before investing to avert failure.
iii. To present finance as the "Back Bone" of organization success, and also to provide an evidence to accept or refute This research work will be beneficial to First Bank Plc to the establishment of effective financial management technique and other organization that want to achieve efficiency and growth. It will also serve as a guide to scholars in this field to the extension of knowledge
1.4 RELEVANT RESEARCH QUESTIONS
Research question is the relevant question which the research Work will intend to provide answers to.
a. Is the influence of effective financial management on organizational growth?
b. Is there any relationship between effective financial management and organizational efficiency and growth?
c. How does effective financial management prove to be the only key to organization success?
d. How important is the role of effective financial management in an organization?
1.5 STATEMENT OF HYPOTHESIS
Hypothesis is an important tool of enquiry and therefore an indispensable instrument of research. As asserted by wikipedia.org, hypothesis is a proposed explanation for an observable phenomenon. It is regarded as a link between theory and reality . I t is therefore an important tool of research, the following hypothesis have been formulated for proofing.
HYPOTHESIS:
HO: Effective financial management is not a tool for measuring organizational efficiency and growth.
EI: Effective financial management IS a tool for a sustained organization efficiency and growth.
1.6 SIGNIFICANCE OF THE STUDY
The importance of this research work is to gain more insight and knowledge on the relationship that exist between effective financial management and organizational efficiency and growth. The research is also relevance because it will serve as guide to banks and motivate them in the art of effective financial management.
1. 7 SCOPE OF THE STUDY
The scope of this research is limited to the Jos Market Branch of First Bank Nigeria Plc. It will analyze and evaluate financial management techniques required in an organization and appraise the extent of effective financial management applied by First Bank Plc This research study focuses on the significant impact of the effective financial management to organization efficiency growth. Finally, this research work is limited to be used as an academic research work by the researcher to fulfill one of the programme requirements in the department.
1.8. LIMITATION TO THE STUDY
This research is faced with certain limitation significant among the constraining factor. Research of this kind required enough time to cover the scope, but as result of time constraint the researcher was left with limited time to cover academic course work and complete this research work. Another limiting factor is finance, non availability of fund contributing in slowing the pace of this research in term of sourcing for information etc. Nonetheless, the research has been made in such a way that the major constraint was over ruled.
1.9 DEFINITION OF TERMS
In every literature, there are terms exclusive to a particular field, in the course of writing this project the use of certain terms becomes inevitable For the purpose of clarity, unfamiliar terms are defined as they are used in this research work.
i) FINANCE:- Finance as used in this research work is servicing and employment of funds by the organization to achieve a set goal or a given objective.
ii) MANAGEMENT:- Management from the foregoing. is the effective utilization of human and material resources to achieve the organization goal or objective
iii) INVESTMENT:- Investment is the current commitment of money or other resources in the expectation of reaping future benefits.
iv) FINANCIAL PLAN: Financial plan is the set out actions or arrangement of the organization in employing or servicing the funds or assets.
V) BUDGETING:-Budgeting is the act of planning by the organization on how to spend the fund that is available in a given period of time.
Vi) FINANCIAL RISK: Financial risk is the possibility of something bad or unpleasant that might happen to the fund or investment of the organization.
Vii) DISBURSEMENT:- Disbursement of fund, is the paying out money or the act of releasing fund that is available for a special purpose or targeted goal of the organization.
viii) FINANCIAL MANAGEMENT:- Financial management from the foregoing is the effective utilization of funds to achieve the organizational goal/objective.
ix) FORECASTING:- Forecasting as used in this context is a description of what is likely to happen to organization in future.
x) FINANCIAL FORECASTING: - Financial forecasting as used in this research work is a description of what is likely to happen to the funds or assets of the organization in the future based on the information that is available to them at moment.
CHAPTER ONE
INTRODUCTION
Finance is one of the most essential aspects of business management. As asserted by wikipedia.org, finance is the science of funds management. The establishment of a good business plan, with the best and proper set of human resources and equipment is not result oriented without effective management of the organization's fund. It is a known and acceptable fact that effective financial management is the only key to organization success: without proper financial management, organization is unlikely to succeed. This is because organization depends on its finance to make appropriate investment production, administration and retain human capital Wikipedia.org states that managing money is essential to ensure a second future for the organization. The concept of financial management - been reviewed and discuss by many scholars in the field.
Neave-and Wiginton (1981') states financial management goal and principal task are raising finance capital to invest in productive enterprises with a view to maximize the value of the owner's investment. Furthermore the primary objective of financial management is to maximize financial and economic benefits from an investment. Financial management from the researcher's point of view is the task of balancing risk and profitability, while attempting to maximize an organization wealth and value of stock. From the foregoing, the success and survival of every organization depend solely on the effective utilization of funds at its disposal to achieve organization goal while maximizing profit
1.1 BACKGROUND TO THE STUDY
The First Bank Plc was established in 1894. Head quartered in marina, street Lagos the Bank has an international presence through its subsidiary FBN Bank (UK) in London and Paris and its offices in Johannesburg and Beijing with about 1.3 million shareholders across the countries. First Bank is quoted on the Nigerian stock exchange and has an unlisted Global depository receipt (GDR) programme. The Bank provides a comprehensive range of retail and corporate solutions and through its subsidiaries contributes to national development in capital market operations, insurance brokerage, bureau de change, private equity/venture capital, pension funds management, registrarship, trusteeship, mortgages and micro-finance.
Retrospectively, the past experience of dependable service, the Bank continued to strength its relationship with customers consolidating alliances with key sectors that have been strategized to the well being and of Nigeria. First Bank, inarguably the country's most diversified financial service group serves more than 4.2 million customers through 536 locations in Nigeria. Since Banks are the main facilitator of funding through provision of credit, the Bank financial funds (investment) need to be managed carefully with priority attention to balancing the financial risk and profitability. With the advent of numerous bank facilities such as APG bond, LC abridge facilities etc which on the surface seems attractive but risk prone, the financial institutions come to the realization that to succeed in this precarious business environment requires effective planning, budgeting, forecasting, procurement, disbursement and control, of its funds. Financial management comprises evaluation/appraisal of investment portfolio, working capital management, cash management etc. The concept of realizing organizational growth has been related to effective financial management. This is because profitability which is the end result off financial management has to do with:
i. increase organization stock worth
ii. maximize shareholders funds
iii. retain best crop of human resources
iv. guarantees future investment etc
In the absence of fund, the organization does nothing but fall since the financial obligation could no longer be met.
1.2 STATEMENT OF THE PROBLEM
Effective financial management was seen as the only means of pulling Bankers off their doom occasioned by the Banking reform era. The Bank reform era spelt doom and unpleasant surprises to most Bankers as their sharp practice of trading in foreign exchange, treasury bills, opening of fictitious credit and over dependence on government deposits were cancelled. They were compelled to revert back to the core banking activities which is savings and intermediation. This trend puns bankers out their complacency and thwarts the relative peace they enjoyed. As a result of the challenge posed by this remarkable change, Bankers now realized that effective financial management is the only means of surviving in the competitive environment with mega Banks and requirement of transparency
1.3 PURPOSE OF THE STUDY
The primary purpose of this research work is to unveil the factors that are responsible for the failure of business. This includes:
i. To identify the importance and the role that finance plays in
business growth in First Bank PIc.
ii. To identify, various area and how to evaluate a business before investing to avert failure.
iii. To present finance as the "Back Bone" of organization success, and also to provide an evidence to accept or refute This research work will be beneficial to First Bank Plc to the establishment of effective financial management technique and other organization that want to achieve efficiency and growth. It will also serve as a guide to scholars in this field to the extension of knowledge
1.4 RELEVANT RESEARCH QUESTIONS
Research question is the relevant question which the research Work will intend to provide answers to.
a. Is the influence of effective financial management on organizational growth?
b. Is there any relationship between effective financial management and organizational efficiency and growth?
c. How does effective financial management prove to be the only key to organization success?
d. How important is the role of effective financial management in an organization?
1.5 STATEMENT OF HYPOTHESIS
Hypothesis is an important tool of enquiry and therefore an indispensable instrument of research. As asserted by wikipedia.org, hypothesis is a proposed explanation for an observable phenomenon. It is regarded as a link between theory and reality . I t is therefore an important tool of research, the following hypothesis have been formulated for proofing.
HYPOTHESIS:
HO: Effective financial management is not a tool for measuring organizational efficiency and growth.
EI: Effective financial management IS a tool for a sustained organization efficiency and growth.
1.6 SIGNIFICANCE OF THE STUDY
The importance of this research work is to gain more insight and knowledge on the relationship that exist between effective financial management and organizational efficiency and growth. The research is also relevance because it will serve as guide to banks and motivate them in the art of effective financial management.
1. 7 SCOPE OF THE STUDY
The scope of this research is limited to the Jos Market Branch of First Bank Nigeria Plc. It will analyze and evaluate financial management techniques required in an organization and appraise the extent of effective financial management applied by First Bank Plc This research study focuses on the significant impact of the effective financial management to organization efficiency growth. Finally, this research work is limited to be used as an academic research work by the researcher to fulfill one of the programme requirements in the department.
1.8. LIMITATION TO THE STUDY
This research is faced with certain limitation significant among the constraining factor. Research of this kind required enough time to cover the scope, but as result of time constraint the researcher was left with limited time to cover academic course work and complete this research work. Another limiting factor is finance, non availability of fund contributing in slowing the pace of this research in term of sourcing for information etc. Nonetheless, the research has been made in such a way that the major constraint was over ruled.
1.9 DEFINITION OF TERMS
In every literature, there are terms exclusive to a particular field, in the course of writing this project the use of certain terms becomes inevitable For the purpose of clarity, unfamiliar terms are defined as they are used in this research work.
i) FINANCE:- Finance as used in this research work is servicing and employment of funds by the organization to achieve a set goal or a given objective.
ii) MANAGEMENT:- Management from the foregoing. is the effective utilization of human and material resources to achieve the organization goal or objective
iii) INVESTMENT:- Investment is the current commitment of money or other resources in the expectation of reaping future benefits.
iv) FINANCIAL PLAN: Financial plan is the set out actions or arrangement of the organization in employing or servicing the funds or assets.
V) BUDGETING:-Budgeting is the act of planning by the organization on how to spend the fund that is available in a given period of time.
Vi) FINANCIAL RISK: Financial risk is the possibility of something bad or unpleasant that might happen to the fund or investment of the organization.
Vii) DISBURSEMENT:- Disbursement of fund, is the paying out money or the act of releasing fund that is available for a special purpose or targeted goal of the organization.
viii) FINANCIAL MANAGEMENT:- Financial management from the foregoing is the effective utilization of funds to achieve the organizational goal/objective.
ix) FORECASTING:- Forecasting as used in this context is a description of what is likely to happen to organization in future.
x) FINANCIAL FORECASTING: - Financial forecasting as used in this research work is a description of what is likely to happen to the funds or assets of the organization in the future based on the information that is available to them at moment.
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