1.1 BACKGROUND OF THE STUDY
“It s something of a truism that we are living in an era of planning and control. Whether it be the housewife with her house keeping allowance or the industrialist with his responsibilities to shareholders, planning and control are a part and percel of our daily lives and it is an essential factor in national business and privet life”
In a competitive world where the key factors are costs, price turnover and profit planning and control enable every individual to have a sound appreciation of the financial implications of his plans and actions, financial planning and control can be used by any size of type of organisation and in degree varying form a complete system, covering decentralized departments to organisation with only a single procedure. As a tool of management, it can increase the efficiency of the organisation as a whole since all the departments are involved.
Moreso, no business can prosper unless all functions accounting finance, marketing, personnel and so forth are fully staffed with competent individuals.
The efficiency and effectiveness of any organisation therefore depends on a number of factors which may be categorized as clarity of purpose, management, planning, control and communications. There is need to have a knowledge of the objectives of the organisation otherwise it will not be possible to identify goals set targets for their achievement in form of planning control and management of it finance.
According to Eugene F. Brigham & B .J compesy, “Finance Management involves planning for, acquiring and utilizing funds in a way that maximizes the efficiency and value of the firm”. Most especially finance is the evaluation and acquisition of productive assets, procurement of funds and disbursement of funds. It involves four basic issues which are the functions of the financial officer. These functions are:
- Raising of funds to finance projects.
- Employment of these funds in viable projects
- Management of the cash flow arising form these project, and
- Return of funds to their funding or original source Financial capital is the major resources of any firm.
The financial manager’s duty is to implement the acquisition, allocation and management of these resources. Finance therefore spreads into all segments of a firm’s activities thus, its function must be understood by all the managers in the firm.
Having known the future financial needs of a firm and its financial policies the question then is, how are these financial or funds raised ? This required the knowledge of the financial markets form which funds are drawn. It also required a knowledge of how to make sound investment decisions and to stimulate efficient operations in the organisation. These are alternative choice in financial decisions.
The choice includes the use of internal or external sources, According to U. N Harper, “before looking outside a firm for fund, the possibility of providing such funds internally should be examined.”
This source is mostly used for the firms expansion and should not be overlooked when planning finance.
They are generated from the operations of the firm and is mostly made up of undistributed or retained profits, depreciation provision, tax provision and reduction in current assets. The external sources on the other hand are made up of two main types namely short-term funds and long-term funds.
SHORT TERM FUND: These consists of trade credits bank overdrafts, bank loans and promissory notes etc.
LONG TERM FUNDS: These refer to funds obtained either form loans with a maturity data several years in the future or from the owners of the business. They consist of two broad types viz. equity funds and debt funds.
Equity funds represent the total interest of the owners o the business in the form of original share contributions plus subsequent additions either by way of additional investment or by ploughing back profits or reserves into the business. Debt funds are the long term debt obligations of the business and its usually made up of secured and unsecured debentures and bonds. The main sources of these long term funds are the banks and the capital markets.
The need for financial planning therefore arises because financial resources are limited and costly and even where the resources are available the areas into which they could be applied profitably are diverse. Moreover, planning and control are the essence of profit planning and act as a device that enables management to anticipate change and adopt to it. No business exist without some form of this Siamese twin concept and success in business is proportionate to its planning and the skill with which it is controlled.
According to B. C Lenke and J. O. Edwards, financial planning and control can therefore be said to be the name given to a system which is being used to increase overall management efficiency.”
It is concerned with planning for allocation of resources, monitoring the usage of these resources to assist in achieving the objectives of effectiveness and efficiency both large and small scale organisation.
1.2 STATEMENT OF THE PROBLEM
This project will attempt to determine the extent to which financial planning and control enables management to achieve its set objectives efficiently.
A successful organisation can be said to be an organisation that knows what it wants to achieve, success in achieving these goals and does so without having to take a sledge hammer to crack a nut. Most organisation however take the sledge hammer to crack nuts while trying to achieve their goals. This study will therefore try o answer such questions like:
- Is the enterprises process set to obtain maximum profits ?
- Is a satisfactory returns on investment being realized over the complete economic cycle ?
- What problems affect the implementation of financial planning and control system in the company ?
- What kind of control should be applied ?
- How effective is this control ?
- What action should be taken to ensure optimum use of facilities both in the intermediate and long term
1.3 OBJECTIVES OF THE STUDY
Planning and control are essential ingredients of successful management at all levels. Their proper exercise is often the key to managerial efficiency and growth.
The purpose of this study therefore will be to develop a realistic picture of how financial planning and control can help make an organisation more efficient, effective and successful since it helps managers to know the financial implications of their plans and actions.
1.4 SIGNIFICANCE OF THE STUDY
In a competitive world, the key factors are costs, price, turnover and profits and these are factors which no manager can ignore. Moreover, no business can survive for long time unless it makes an adequate profit, otherwise the investors who supply the capital will take steps to winds it up and place their money elsewhere. Profit therefore remains then overall measure of efficiency and the sign of success. The importance of this study will lie in the development of methods of using financial planning and control to help management in making relevant policy decision which if well applied will increase their efficiency and effectiveness. This will in turn help create an opportunity for the firm to achieve their maximum profit which will be beneficial to the shareholders, employee, future project writers , and the community.
1.5 RESEARCH QUESTIONS
1. What do you think is the major problem that affects the implementation of financial planning and control; system in the company.
2. Do you think the fund managers of Nigeria breweries exercises prudence in their work, if not does it affect planning and control in the company ?
3. What is the implication of poor financial planning and control.
1.6 STATEMENT FO THE HYPOTHESIS
1. Ho: The present economic situation is the major
problems that affects the implication of financial
planning and control system in the company.
Hi: The present economic situation ids not the major
problems that affects the implementation of financial
planning and control system in the company.
2. Ho: The attitude o find manager of Nigeria breweries as
regards to exercising of prudence in their work
affects planning and control in the company.
Hi: The attitude of fund managers in Nigerian breweries
as regards to exercising of prudenc3e in their work
does not affect planning and control in the company.
3. Ho: Poor planning and control affect the maximization of
profit in the company.
Hi: Poor planning and control does not affect the
maximization of profit in the company.
1.7 SCOPE AND LIMITATION
There project writer intends to explain how the financial function can assist in the planning and control of large scale organisation in Nigeria. However, the study will cover only one organisation – Nigeria breweries Plc. The coverage of only one organisation out of the numerous industrial in the same category in Nigeria is not without some constraints.
One of there greatest limitation of this study is time. The time allowance is short, this made it difficult for the project writer to put up a very comprehensive study. Another limitation is the inadequate of funds for effective financing of the research work. The availability of funds would have made it possible for the project writer to visit other large scale organisations within the country.
In addition tot he above is the unco-operative attitude of some members of management of Nigerian.
Breweries Plc in obtaining the profit plan of the company, (even though it is a public company).
Nevertheless, the project writer hopes that the analysis of variances from the profit plan that was made available to the researcher after so much trouble would enable the company as well as future researchers to have an insight of the companies and conclusions.
1.8 DEFINITION OF TERMS
Finance – The evaluation and acquisition of production assets, procurement of funds and disbursement of funds.
Equity funds - The total interest of the owners of the business in the form of original share contribute plus subsequent additions either by way of additional investment or by ploughing back profits/reserves.
Debt Funds - The long-term debt obligations for the business and is usually made up of secured and unsecured debentures and bonds.
Efficiency – Is concerned with the quality of people vis-a-vis the resources required to achieved an organisations goal.
In other words, it is the rate of output to input
Policies – Statements that attempt to inform and guide employees so that the totality of action by individualize are constant with the essence of direction of the company.
Objective - The goal organisation or individual sets out to achieve.
Effectively - The degree to which the round the organisation achieves its goal.
Management – The process by which a cooperatives groups directs actions towards common goal.
Liquidity – Refers to a firms a cash position and its ability to meet maturing obligations.
Working Capital – Refers to a firms investment in short term assets- cash, short term securities, accounts receivable and inventories.
Planning - A delineation of goals and a formulation of a decision model for selecting means of achieving them.
Control - The presence in a business of that force which guides it to a predetermined policies and decisions.
Organisation - a complex social system which brings together a number of individual proper
Strategies Planning – Is planning in regard tot he general direction of the organisation, it considers the resources of the organisation, the likely behaviour of competitors, the direction of technological change and the projected demands of the market place.
Capital investments – Investments which yields return during several future time period.
Funds flow - A statement which provides an analysis of the sources of additional funds available to the enterprises during an accounting period and an analysis of the manner in which they have been utilized.
Cash flow- A statement which explains the change in the cash situation of an enterprise during the accounting period.
Budget - (a financial plan) A quantitative expression of a plan of action and an aid to coordination and implementation.
OTHER SIMILAR ACCOUNTING PROJECTS AND MATERIALS