Analyzing Debt Management Techniques In Business Organizations In Nigeria (a Case Study Of Nigeria Bottling Company Plc Enugu), Abstract
Previously Debt Can Be Talked Of When Individual-group Of
Solicits Suffer Efficiency- At The Down Of ...
Previously debt can be talked of when individual, group of
solicits suffer efficiency. At the down of the modern economic life, it has
been observed that one can be debtors and get stands to meet his current
liabilities provided it as well as manager.
This research work delves into the business managing of debt,
analyzing its management in business organization, the fruit of its efficient
management in an organization.
A close look at the Nigeria Bottling Company Plc Enugu, the
research has employed both primary and secondary source of data. Primary
sources involves oral interview the use of personal observation from the source
document, secondary are the data sources from published textbooks.
A good financial manager can sources fund by debt invest and make
a profit before the maturity of the debt. To do this, some speculative factor
can be considered and handled so that balance or breakdown of the risk and
return can been sought for and a fairly equilibrium is met.
1.1 Background of the study
1.2 Statement of the problem
1.3 Purpose of the study
1.4 Research questions
1.5 Scope of the study
1.6 Significant of the study
1.7 Limitation of the study
1.8 Definition of terms
2.0 Review of related
2.1 Meaning of debt management
2.2 Classification of debt – management
2.3 Analyzing debt management in relation to
organization’s working capital
2.4 Cost of capital in relation to
debt – management techniques
2.5 Different school of though in debt management
2.6 Different types of debt-management
2.7 Debt-management financing in
2.8 Cost of debt capital in business organization
3.0 Research design and
3.2 Area of the study
3.3 Population of the study
3.4 Sample and sampling procedure / technique
3.5 Instrument for data collection
3.6 Validation of the instruction
3.7 Reliability of the instruction
3.8 Method of data collection
3.9 Method of data analysis
4.0 Data presentation and
4.1 Presentation and analysis of data
4.2 Summary of result
5.0 Discussion, recommendation
5.1 Discussion of results finding
5.3 Implication of the research finding
5.5 Suggestions for further research
1.1 BACKGROUND OF THE STUDY
In contemporary business setting, debt is seemingly unavoidable.
Sometimes it emanates from short fund suitable with the existing trade terms.
Debt does not occur only when money is borrowed. It equally occur when there is
exchange of goods or service with a derived payment. Each time goods or
services are exchanged with a different of its financial obligation there is
incidence of debt.
C. A. Ezigbo (2001) defines debt management as the ability of
financial manager or management to make good use of the money borrowed by the
company in order to achieve the set objective. It can also be defined as the
process where the debt obligation is being managed in all ramifications whether
from the domestic or external sources.
A good business may not always write to finance the beginning of
his business from his personnel savings.
At the commencement of a conscience organization the owners try to
maintain a favoaruble capital structure it is normal for the business owners to
finance to finance business. The choice of the capital structure and the
finding technique is left at the merely of the financial managers.
Business organization usually structure achieve a number of
objectives. These corporate objective provides a set of criteria upon which
financial decisions can be based. In general terms of business organization
seek to achieve by obtaining funds from various sources and investing some
reasonably. It is important to recognize that the various steps of fund raised
has its own cost and certain risks. For example debentures, preferences and
ordinary shares. Loans. Raised on the security organizations assets tends to
have fairly low rates of interest although they imply certain risks. Failure to
meet the terms of th loan on due date would the tender to confiscate the said
assets with potentially catastrophe consequence for the borrower.
Ordinary share however has no fixed charge as such. Its dividend
depends on the periodic business profits yet excessive use of equity shares is
determine to the organizational control, if it is not technically handled. When
the equity shared is used in marginal funding of the firms, it is only
advisable when the issue is such that share prices would increase.
One would not expect an issue of share to be made with an
expectation that share prices would fall since that would reduce shareholder’s
wealth. So it can be said that the minimum return required from a new issue is
that which would leave the share price at its present level.
ii. Trade debt: are usually made on credit. This
means that cash settlement legs sometimes behind the delivery of the goods or
the consumption of the service to which the payment relates. It encourages for
the following reasons.
a) The recipient will need to assure himself that
the goods are satisfactory prior to payment.
b) Additional safeguard will be introduced with
regards to the cash collected.
The practice of allowing credit has thus come to be widely
accepted as normal. To achieve the, the financial manager and the management
consider the cost under two categories
a. Cost of allowing credit
b. Cost of refusing credit
1.2 STATEMENT OF THE PROBLEM
Debt has implication in the life of every business organization.
Poor analysis of debt affect a prime adversely.
It is pertinent to note that many business have gone into
compulsory liquidation due to poor debt management.
In the business tending policy a firm tries as much as possible to
minimize credit following reasons.
a) It brings about bad debts which is a deadly
disease to a businesses.
b) Protracted debt denies the business organization
the chance of using their business opportunities as they fall due.
This project is not pessimistic to debt at all neither it intend
to criticize debt and anything about it, rather it delves into the problems and
consequences of debt and analyzing its management situation.
1.3 PURPOSE OF THE STUDY
Every organization is set up to achieve certain goals using its
resources but the resources alone can achieve nothing without the conscious
effort of debt.
Subscribing to this fact, C. A. Ezigbo stated that debt is the
process where the obligation is being managed in all ramifications whether from
he domestic or external sources.
The general objective of the study therefore is to determine how
the concepts can be successfully applied in a services organization.
The specific objective are:
i. To ascertain what debt management means.
ii. To ascertain the process involved in the
application of the concept.
iii. To find out if this concept is used in coca cola
iv. To identify the difficulties involved in the
application of the concept.
v. To determine how to overcome these difficulties.
vi. To identify the benefits derived from the
successful application of the concept.
1.4 SCOPE OF THE STUDY
The scope of the study covered was an analyzing debt management
technique in Nigeria business organization with much concerned to Nigeria
bottling company Plc.
However, for further reference and clarity, emphasis are made form
other reasons and these are consider vital, thus such emphasis are
profitability solvency, control and conversation.
1.5 RESEARCH QUESTION
a. How does debt management bring about an optimal
capital structure in a business organization?
b. Will good analysis of trade debt management,
help measures an effective working capital management in every business
c. What effort will be made to reach latent
problem, inherent in analyzing debt management in area of organizational
d. How does the important element in decision about
resource help to finance the almighty surrounding concept of the cost capital.
1.6 SIGNIFICANCE OF THE STUDY
In a continued effort to reach an applicable equilibrium in the
problems and consequences of debt and its effective management, we employed a
selected statistical to enable us reach fair conclusion.
In the light of the above, therefore the following major
hypothesis have been formulated. Hypothesis mean a tentative statement made by
a researcher, subject to tests with a view to forming basic to study a
1. Ho: effective
debt financing does not bring about an optional capital structure in a business
Hi: effective debt financing bring about an optional capital structure in a
business organization (NULL).
2. Ho: Good
analysis of debt management is not good measure of an effective working capital
management in business organization (NULL).
Hi: Good analysis of debt management is good measure of an
effective working capital management in business organization (NULL).
1.7 DEFINITION OF TERMS
i. DEBT: Money or something owned by or some one a
liability or an obligation.
ii. DEBTOR: One who owes the liability or obligation
iii. CREDIT: trust or confidence in a buyer’s ability
Intention to pay at the same time exhibited b out rushing him with goods.
iv. MANAGEMENT: The process of planning,
organizing, leading and controlling the work of organization members and of
using all available organization resources to reach stated organizational goods.
v. CAPITAL STRUCTURE: Debt or equity relationship,
it is configuration of equity capital loan capital in the long term financing
of an organization.
vi. EQUITY: The rush bearing portion of the long
term capital of a business organization.
TERMS AND CONDITIONS APPLY
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