THE ROLE OF FINANCIAL MANAGEMENT IN A CO-OPERATIVE ORGANIZATION

TABLE OF CONTENT

Title page Approval page Dedication Acknowledgement Abstract Table of content

CHAPTER ONE: 1.1 INTRODUCTION 1.2 STATEMENT OF THE PROBLEM 1.3 OBJECTIVE OF STUDY 1.4 SIGNIFICANCE OF STUDY 1.5 STATEMENT OF THE HYPOTHESIS 1.6 SCOPE OF THE STUDY 1.7 SCOPE OF THE STUDY 1.8 DEFINITIONS OF TERMS

CHAPTER TWO: 2.1 REVIEW OF THE RELATED LITERATURE 2.2 GENERAL REVIEW 2.3 FICNAIL RATIOS AND PROFIT PLANNING 2.4 BUGETING AND INVESTMENT ANALYSIS 2.5 MANAGIN THE FINANCIAL STRUCTURE 2.6 REFRENCE

CHAPTER THREE 3.1 RESEARCH DESIGN AND METHODOLOGY 3.2 SOURCE OF DATA 3.3 PRIMARY 3.4 SECONDARY DATA 3.5 SAMPLE USED 3.6 METHOD OF INVESTIGATION

CHAPTER FOUR 4.1 DATA ANALYSIS AND INTERPRETATION 4.2 DATA PRESENTATION AND ANALYSIS 4.3 TEST OF HYPOTHESIS

CHAPTER FIVE SUMMARY, FINDINGS, CONCLUSION AND RECOMMENDATION 5.1 SUMMARY OF THE FINDINGS 5.2 CONCLUSION 5.3 RECOMMENDATION

BIBLIOGRAPHY APPENDIX / QUESTIONNAIRE

CHAPTER ONE

INTRODUCTION Financial management involves all the activity of the financial managers concern with the rising of capital lining cash and credit requirement including the effective control of financial resources

The activity could be suggested as follows; 1.Converting forecast into planned and budget 2.Planning the appropriate capital structure 3.Raising cash flow outside the business 4.Forecasting the future 5.Investing surplus fund 6.Controlling accordance the with cash plans balance and and with flow in

changing

circumstance.

7.With

the

emergency

of

finance

as

separate

field emphasis was more or less on legal matters such as mergers

FORMATION OF NEW COMPANY DISPOSAL AND CONSOLIDATION With the most vital problem of the firm was

identification of the means for raising capital for possible expansion due to the increasing wave in

industrialization. The mobility of fund from the Areas of surplus to the areas of scarcity posed a lot of problem. Because of the radical changes which ochre during the depression of 1930 which culminated into the failure of many business finance which redirected to bankruptcy, reorganization and liquidity for profitability under the imperfect perfect competition continues to be the motivation to maximize the profit and wealth of the owner. To ague to maximize profit has led to he study of financial

management of which attribute factor can be socialized as follows; (a) Saving (b) Business growth (c) Inflation (d) Competitive

Base on the above background, some through was giving a financial management to provide skillful planning control activity. The practicing managers are interested in this study because among the most crucial decision of the firm are of those which relates to the financial matters and so are giving better treatments for and execution of financial management

better understanding of financial management which provide them with conceptual and annalistically

insight on the capital fund and using the capital fund are called financial function of any firm

GOALS AND OBJECTIVE OF THE FINANCIAL MANAGERS Financial which is the life wire of any business and as developed in 1900 since it concerns the actual flow of money as well as any claim against money. The financial mangers subsequent decision is made in such more co-ordinate manner responsible for the control system. The financial managers are concern with; (a) Financial planning with the bank (b) Raising of fund (c) Allocation of fund (d) Financial controlling of fund (e) Interpretation

FINANCIAL PLANNING

The involve he estimating and planning of the future flow of cash receipt and disbursement raising of fund involve organizing the raising of fund which involve the funding necessary for planning. The

second is the acquisition of the fund. There are a wide variety if the fund. It has certain

characteristic as cost maturity, availability. The encumbrance of asset and other terms exposed by the capital. On the bases of this function, the financial

managers of a bank must determine the best mix of finance financial formulation for the banking have industry. to In take the Therefore the issue of the of such

managers of

policies.

interest

policy is to plane, co-ordinate, motivate and control activities of the firm, which are responsible of the efficient financial management of the resources. An efficient financial management thus is the same as a

valuable aid to the process of decision-making and a major contributing to the pale and a major

contribution to the pale of economic. The principal responsibility theory of financial of managers involves a and

evaluation

investment

financial

dividend decision with the sole aim of maximizing wealth. The financial managers studies the

annalistically techniques and the environment where financial decision are made. The financial manager keeps accurate account and records of, preparing the cost, providing the means for payment of bills, procuring additional in case of cash needed. Investing fund in asset and procuring the bets means of financing in relation to the

overall development of the organization. The task of the financial manager is invisibly faced with problem with those of profitability, liquidity and risk

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factor, which influence both internal and external environment. Only sound financial decision based on the

analysis, planning and control of activity therefore can help optimized the values of operational

optimization of the profit and shareholders wealth in one of those guiding. Objective of business enterprise, which its

allocation of resource and the financial decision for the financial manager. The financial manager must be aware of sources of finding the business and be

guided by time, selection and combination of those available. That is the financial manager dilemma and the principle of sustainability. is that of The financial and

managers

dilemma

profitability

liquidity while sustainability is the principle of time balancing with asset and liability that is using short time term liability to financial short term

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asset and long term liability to finance the long term asset.

ALLOCATION OF FUND Wise use of fund is allocating such fund in such project or such venture that will yield optimal

return ensuring efficient use of fund. The financial managers ensure the efficient allocation of fund

among the various uses. The allocation must be in accordance with the underlying objective of the firm to maximize the profit in the customers wealth. The role of financial manager has expanded of the

management of the working capital to long-term asset and liabilities. He is concern with ways of efficient managing efficient this current asset in order to to maximize amount of

profitability

relative

the

fund tied up in the asset

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FINANCIAL CONTROLLING Financial monitor financial operation to ensure the cash flow are proceeding according to the plane

INTERPRETATION The bank is part of financial community. It

financial management can be fully interpreted only with the contest by he working of the financial

institution and the markets

ORGANIZATIONAL GOALS Since this project is concern with the role of financial managers in a cooperate organization,

therefore, it is important to note the goal of any financial. Maximization of profit. This is the frequency

encountered goals of any business impact all business

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believed that as long as they are earning as much as possible while holding down cost, they are archiving the goal of profit maximization appears performance.

b.

Maximization

of

wealth is

the the

main

objective

of is

financial

management

maximization

accomplished by maximizing the sum of the present value of the stream of dividends received and the present value of the increased in the market values of the shares of stocks held by the shareholders. Thus, the apparent wealth maximization is the best economic objective shareholders as the owns and for the bank whose primary interest is to customers own. The environmental scope of financial manager in

executing their job, Financial managers do not have absolute authority their in carrying are out their by

responsibilities

actions

constrained

certain factors beyond their control.

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THESE FACTORS ARE DIVIDED INTO TWO a. Internal environment factor the principal factor in this case is the unavailability or the lack of human resources and the organizational self imposed standard. b. B. The external environment factor such as the legal the and framework cultural and social

political values, trends

economic custom

climate, .It

technological is therefore take

attitude

imperative

that

financial

manager

should

cognizance of environmental factors that affect their decision.

STATEMENT OF PROBLEM There has been unprecedented increase in the

quest for the answer of the following questions posed in order to clarify the duties of financial manager,

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which is the prospective rank of a student studying finance. Financial managers do not have authority in carrying out their their responsibilities actions are their by

responsibilities

constrained

certain factors beyond their control. These factors can be dividrdinto two Internal environment factor .The principal factor in this case. The [rinc9ipal factor in the case is the unavailability of human resource and the organization self imposed standard. The external environment factor such as the political legal firm work. Culture and social trends value. and The the

economic

climate

technological

customers attitude. It is therefore imperative that financial managers take cognizance of the

environmental factors that effect their decisions.

There has been unprecedented increase in the quest for the increase for answer for the following

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questions posed in order to clarify the duties of a financial manager, which is the prospective rant of studying finance. What is managerial finance? How importance is the financial functions for the company. Are the

financial mangers responsible for the performance of certain task? Dose this means that his action are design to accomplices specific goals. How and when did the financial archive the firm objective, which is the finical managers definition of the fare price, and how is it related to his firm return and

investment capital. One may logically ask, why are we interested in this cash flow if they do not affect the profit. Why cannot the profit effect not be

taking directly not the account in the analysis? What tools and techniques are available to him and how dose he goes about managing his own performance. On a general scale, do they have any operational meaning?

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That is how can managers operation use to further national goals. Having identified these questions, the provision of possible answers to the listed

question constitutes areas of possible consideration of the project. As stated that the financial

management must find a rational base for answering the following three questions; (a) How large should an enterprise be and how fast should it grow. What should be the composition of its liability (b) What should be the composition of its

liability (c) In what form should it hold it asset board decision.

The asset question stated above relate to three board decision areas of financial management.

Investment financial managers become important that

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the primary research conducted on a named company serves a dual purpose this not only serve as part of the tools in answering the questions, but is mainly used to unfold the extent to which the financial managers of a company is executing his duties

according to the project

SIGNIFICANCE OF THE STUDY The purpose of this project: the role of finical management in cooperate organization, is to equip the practicing, finical managers, financial controllers, and director of finance, and treasurers, readers with student a of

financial

studies

basic

understanding of financial decision. The financial manager carries out financial decision maximize

through the following; (a) Current asses management (b) Capital budget decision

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(c)

Dividend decision

(d) Financial decision

CURRENT ASSET MANAGEMENT The financial manager has every right to manage the long-term asset and also the duties to mange the current assets, efficiently to safeguard the fund

against liquidity or insolvency Investment in current affects the firm

profitable liquidity and risk. If the firm doses not invest sufficient funds in current asset, it may

become illiquid. But it would less profitability, as idle current assets would earn anything, in order to ensure that it would not earn anything. In order to ensure funds should that are neither insufficient in current nor unnecessary in fact it the

invested

asset, of

develop

sound

techniques

managing

current asset.

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CAPITAL BUDGETING It is investment decision of the firm to have its refund investment in long-term project in

anticipation of expected flow of future benefit over a period of years. This decision could be either to mechanize a process, replace a machine with another modern type, selecting between machines, and

induction of new product or business expansion. These features are; 1.Investing current funds for future benefit 2.The period of inc=vestment which involves long term activities 3.The potential benefit, which will accrue to the firm over a period of time.

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DIVIDEND DECISION The finical manager must determine the optimum dividend - payment ratio. He should consider the

questions of dividend stability, stock dividend and cast dividends. Financial manager must divide whether the firm should distribute all profit or retain the balance.

FINANCIAL DECISION The financial manager must decide when, how, and whom to acquire fund from to meet the firm investment needs. The significant t issue before him is to

determine the proportion of equity capital and dept capital. The proper balance will have to be struck between return and risk once the financial manager is able to determine the bets combination of dept and

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equity. He must raise the appropriate amount through the bets available resource.

RESEARCH HYPOTHESIS Base hypothesis on the will certain be theoretical assumptions, There

formulated

below.

theoretical assumption, which include the established fact that the level of investment firms undertake and as such, the level of dept end by firms. Investment involve additional rest or financial assets and is usually measured in terms of fund used in the

process, this funds include both equity and debt. Ho: the level of debt financing has a negative effect on the economy Hi: the level of financial has a positive effect on the economy

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Ho: the level of dept financing has a positive effect on the performance of the employee

Hi: the level of debt financing has negative effect on the performance of the employee

Ho: the level of debt financing has not positive effect on the productivity of a firm Hi: the level of debt financing has a positive effect on the productivity of the firm.

LIMITATION AND DELIMITATION OF THE STUDY The research, may not fail to expose some of the constraint or restriction we have encountered in

collecting the material for the project. There is no gainsaying the unavailability of textbook in this

field of study especially in developing country like is a different.

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Hence,

inspite

of

the

fact

that

the

published

financial statement by this banks are really seen, they are equally not comprehensive as regards the needs of a researcher. Some important information is not usually available for further information cannot be overemphasizing. Some claim the compliance with their management policies not to disclose some vital information to the public. It is a known fact that most Lagos banking and it industries is where had most their headquarters are in

decision

taking.

Reading on this fact, the questionnaire sent to some of the industries could not come back due to the irregularities in our communication system. However, therefore the firm (union bank Plc

Enugu) was referred to after the researcher might have compared the information available to him in the respective banking industry that cooperate with him within the locality.

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Union bank Nigeria Plc started operation in the year 1917. Union bank if Nigeria Plc Enugu has five (5) branches in Enugu

DEFINITION OF TERMS The general ideal of this work The role of financial manager in a corporate organization looks into the following perspectives; Chapters subject one give the the general explanation of the

from

historical

perspective,

organizational goals, and statement of problem, goal and objectives.Significance of the study and

limitation and limitation and research hypothesis Chapter tow literature review from the general. Overview, financial ratio and profit planning

management of current asset, budgeting and investment and management of current asset, budgeting and

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managing the financial and management of short and medium term. The financial management involves all activities of the financial manager concerned an with raising of

capital,

planning

cash

credit

requirement

including the effective of the control system as the financial recourses. The activities could be selected as follows (a) converting forecast into planes and budget (b) Planning the appropriate capital structure

Chapter

two,

literature

reviews and

from

the

general planning

overview,

financial

ratio

profit

management of current assets, budgeting and financial analysis. Budgeting and investing. Managing of small financial strut and mangling f short and long term financing.

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Chapter

three and

deals

with

the from

research the

methodology Personal

conducted

consulted

flow.

interview, secondary source of data, questionnaire hypothesis test and empirical analysis of the named company. However, the chapter four deals with the discussion of result through financial ratio analysis,

hypothesis testing and implication of the result On the other hand chapter five look into the summary, conclusion and recommendation respectively finally

followed by bibliography, glossary and appendix

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