Assessing Working Capital Management at Federated Commodities Limited
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Date
2008-08-19
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Abstract
This study is envisaged to come out with different approaches and techniques of managing working capital (short-term financing) in order to solidify the financial base of Federated Commodities Limited. The researcher has therefore set for himself the aim of examining and evaluating the working capital management practices of FEDCO f<5r the past three years; these are 2005, 2006 and 2007 financial years.The researcher employed both primary and secondary data sourcing techniques. The primary data was obtained through the use of basically questionnaires and interviews along-side. With regards to secondary data, they were sourced from financial statements and auditors' reports of the Company. Empirical evidences from works done by other researchers were also resorted to. Analyses were done by employing both qualitative and quantitative measures in order to test the stated objectives of the researcher. In the findings, the researches revealed that cash flows into and out of the company were highly significant. But, with weak management of the components of working capital (stocks, debtors, creditors, cash and cash equivalents and accruals), the company was plunged into both over-trading and illiquidity, occasionally. On the basis of the findings, the researcher recommends critical attention should be given to working capital management practices of FEDCO. The study concludes on the observations of the need for rigorous effort to be made by all stakeholders of FEDCO in terms of corporate governance, to understand and appreciate the dare consequences of liquidity on the survivorship of companies. As much as possible, information asymmetry between and amongst stakeholders should be eliminated or minimised for each to have access to information needed and be able to contribute meaningfully towards the rejuvenation of the finances of the company. Stakeholders who need further education on working capital should do well to obtain and that all must endeavour to understand that no single function of the organisation shall survive into fruition, not even sub-optimal results, if the finances of the firm wobble into crush.
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A Long Essay submitted to the Department of Accounting and Finance Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the degree of Executive Master of Business Administration, 2008