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The Impact Of Credit Management On The Profitability Of A Manufacturing Firm
[A CASE STUDY OF UNILEVER PLC ABA, NIGERIA]
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1.3 OBJECTIVE OF THE STUDY
The main objective of this study is to
appraise the impact of credit management on the profitability of
manufacturing firms and also providing effective means of reducing
default in collection of accounts.
Other objectives include the following:
(1) To appraise the effects of the credit management on the profitability of the company.
(2) Identifying the problems associated with credit management in manufacturing firms.
(3) To investigate the advantages of effective and efficient management of trade credit.
(4)
To also show how to reduce losses caused by bad debt through the use of
effective and sound collection policy and procedures.
(5) It is also
very necessary for a firm to critically evaluate the individual account
of the customers to enable it obtain the necessary credit information about them and to devise appropriate collection procedures for effective collection of account.
(6) To examine whether the credit management principles applied by the firm is appropriate and effective.
(7) To encourage staff to always be at an alert in respect of knowing who their debtors are.
1.4 FORMULATION OF RESEARCH HYPOTHESES
The following hypotheses are formulated for the purpose of this research work.
Ho: Firm’s do not make some profits when trade credit questions
H1: Firm’s do make some profit when they extend credit to customers.
Ho: Its credit information about customers does not help in reducing bad debt losses.
H2: Its credit information about customers help in reducing bad debt losses.
Ho: Firms that sale on credit to their customers do not make more sales than those who sale in cash.
H3: Firm’s that sale on credit to their customers do make more sales than those who save in cash.
1.5 RESEARCH QUESTIONS
Base
on the problems which this research work is aimed at finding solutions
to, the following questions are put forward in finding solutions to the
problems.
1. Does credit management have any effect on the profitability of a company?
2. Can trade credit be phased out completely from a company’s business dealing?
3. How can a firm enforce collection of it’s over due debts?
4. Has any company through the aid of trade credit facility achieved high profit index?
5. Can the liquidity and profitability objectives of the company be achieved through the use of credit facilities?
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ABSRACT - [ Total Page(s): 1 ]ABSTRACTThe aim of this research work is to appraise “The impact of credit management on the profitability of a manufacturing firm focused on Unilever Nigeria Plc Abaâ€. This is because; trade credit is a short term source of finance and sometimes take the form of bills payable. The statement problem of this research banks about the poor level of credit management and also the problems which the firms encounter as a result of high-rate of bad debts. The objective of this research stud ... Continue reading---
