Select Currency
Translate this page

DETERMINE THE EFFECT OF WORKING CAPITAL ON THE PROFITABILITY OF HOSPITALITY INDUSTRIES.

Format: MS WORD  |  Chapter: 1-5  |  Pages: 62  |  1894 Users found this project useful  |  Price NGN5,000

  DOWNLOAD THE COMPLETE PROJECT

DETERMINE THE EFFECT OF WORKING CAPITAL ON THE PROFITABILITY OF HOSPITALITY INDUSTRIES (A STUDY OF RADISSON BLU ANCHORAGE HOTEL)

 

CHAPTER ONE

INTRODUCTION

1.1    Background to the Study

Every business needs investment to procure fixed assets, which remain in use for a longer period. Money invested in these assets is called ‘Long term Funds’ or ‘Fixed Capital’.Business also needs funds for short-term purposes to finance current operations. Investment in short term assets like cash,inventories, debtors etc., is called ‘Short-term Funds’ or‘Working Capital’. Working capital refers to that part of thefirm's capital which is required for financing short term orcurrent assets such as cash, marketable securities, debtorsand inventories. Funds, thus, invested in current assets keeprevolving fast and are being constantly converted into cashand this cash flow out in exchange for other current assets.Hence it is also known as circulating capital or revolvingcapital or short term capital.The ‘Working Capital’ can be categorized, as funds neededfor carrying out day-to-day operations of the businesssmoothly. The management of the working capital is equallyimportant as the management of long-term financialinvestment.

According to Genestenberg:- "Circulating capital meanscurrent assets of a company that are changed in the ordinarycourse of business from one form to another, as for example,from cash to inventories, inventories to receivables intocash."

The working capital is needed for the following purposes:-

1.                  For the purchase of raw materials, components and spares.

2.                   To pay wages and salaries.

3.                  To incur day-to-day expenses and overhead costs such asfuel, power and office expenses etc.

4.                  To meet the selling costs as packing, advertising etc.

5.                  To provide credit facility to customers.

Working capital policy is an important issue in any organization because without the proper management of working capital components it will be difficult for the organizations to run its operations smoothly. Working capital management is significant due to the fact that it plays a vital role in keeping the wheels of the business running (Lawrence and Charles, 1985). Its effective provision can ensure the success of a business while its inefficient management can lead not only to losses but also to the ultimate downfall of what might otherwise be a promising concern. Business success heavily depends on the ability of financial executives to effectively manage receivables, inventory, and payables (Filbeck and Krueger, 2005).

Furthermore working capital policy has been major issue especially in developing countries. Adequate working capital needs to be maintained in order to discharge day-to-day liabilities and to protect the business from adverse effects (Sayaduzzaman, 2006; Siddiquee and Khan, 2009). It aims at protecting the purchasing power of assets and maximise the return on investment.

Working capital is basically the portion of asset required by a business in current operations. In its gross form, it is the investment in current assets. However, it can also be described in its net form as the difference between current assets and current liabilities. In most organizations, current assets occupy a significant portion of the total asset structure. This invariably requires efficient management of it. Working capital management is concerned with managing the different components of current assets (inventories, debtors/receivables, cash/bank, short-term investments, prepaid expenses) and current liabilities (creditors/payables, provision for tax, other provisions against the liabilities payable within a period of 1 year).

The issues involved in managing working capital of any firm are concerned with the management of the firm’s inventory, cash, marketable securities, receivables and payables etc, In order to achieve a proper balance between risk and return. A well-designed and implemented working capital management must contribute positively to the creation of a firm's value (Zirayawati et al., 2009; Afza and Nazir, 2007). For maximising profits or minimising of working capital cost or to maintain a balance between liquidity and profitability, there is a need to optimise working capital (Padachi et al., 2008). Too little investment in working capital i.e. aggressive working capital policy can lead to disruption in production, increases the risk of not being able to meet the financial obligations and impairs profitability. At the same time a conservative financing policy i.e. too much investment in working capital means idle funds that can earn no profit but involves cost. So, a financial manager has to be vigilant in maintaining appropriate levels of working capital.

1.2    Statement of the Problem

The main problem of this study is poor profitability of hospitality companies and this is attributed to ineffective management of working capital.

Invariably a company must neither keep excess inventory to avoid unnecessary tying down of fund as well as loss in fund due to pilferage, spoilage and obsolescence nor maintain low inventories so as to meet production and sales demand as at when due.

These pose a problem to managers. And can be further discuss in the following ways.

1.  The cause of over and under inventory in an organisation

2.   Decrease in company’s profitability as a result of ineffective inventory management.

3. The deviation between inventory management and production.

1.3     Objectives of the Study

The main objective of this study is to evaluate and determine the effect of working capital on the profitability of hospitality industries. Specifically, this research work stands to achieve the following objectives:

1.   To examine how working capital can be effectively managed to enhance high profitability in Nigeria hospitality companies.

2.   To examine the relationship between working capital and the performance of Nigeria manufacturing company.

3.   To determine the cause of poor working capital management as it affect profitability.

4.    To establish the relationship between working capital and profitability of hospitality industries.

1.4    Research Questions

1.    How can working capital be effectively managed to enhance high profitability in Nigeria hospitality companies?

2.   What are the relationship between working capital and the performance of Nigeria hospitality companies?

3.   How can poor working capital management as it affect profitability of hospitality companies?

4.  What are the relationship between working capital and profitability of hospitality industries?

1.5     Research Hypothesis

Subject to the above stated objectives, the hypotheses developed to be tested in this study was:

H0:  Effective management of working capital does not significantly enhance high profitability in Nigeria hospitality companies.

H0:  There are no relationship between working capital and the performance of Nigeria hospitality companies.

H0:  Poor working capital management does not affect profitability of hospitality companies.

1.6     Significant & Justification Of the Study

The study will increase awareness on the effect of working capital on the profitability of hospitality industries and suggest measures in managing working capital effectively. It will also reveal the problems caused by bad management of working capital and be useful to researchers, scholars, and other third parties as it shall open new area of further research work and at same time advance challenges to up-coming researchers.

1.7      Scope& Limitation of the Study

The effect of working capital aids management effectiveness in an organization (Chukwu, 2008). The study will focus on the effect of working capital on the profitability of hospitality industriesand due to the logical point that not every hospitality companies can be studied as a result of time and resources available, this research is therefore limited to Radisson blu anchorage hotel.

1.8    Definition of Terms

1.     WORKING CAPITAL: Working capital refers to that part of the firm's capital which is required for financing short term or current assets such as cash, marketable securities, debtors and inventories.

2.    HOTEL: These are companies that are engaged in hospitality business.

3.     LIQUIDITY:  Ability of a company to meet his financial need as at when due.

4.    PROFITABILITY: Ability of a business entity to make profit. It means excess of revenue over expenses for a certain period usually a year period.

  DOWNLOAD THE COMPLETE PROJECT

DETERMINE THE EFFECT OF WORKING CAPITAL ON THE PROFITABILITY OF HOSPITALITY INDUSTRIES.

Not The Topic You Are Looking For?



For Quick Help Chat with Us Now!

+234 813 292 6373

+233 55 397 8005


HOW TO GET THE COMPLETE PROJECT ON DETERMINE THE EFFECT OF WORKING CAPITAL ON THE PROFITABILITY OF HOSPITALITY INDUSTRIES. INSTANTLY

  • Click on the Download Button above.
  • Select any option to get the complete project immediately.
  • Chat with Our Instant Help Desk on +234 813 292 6373 for further assistance.
  • All projects on our website are well researched by professionals with high level of professionalism.

Here's what our amazing customers are saying

Emmanuel Essential
Kogi state University
I actually took the risk,you know first time stuff But i was suprised i received as requested. I love you guys 🌟 🌟 🌟 🌟
Very Good
Abraham Ogbanje
NATIONAL OPEN UNIVERSITY OF NIGERIA
At first I was afraid.. But I discovered they are legit. I will bring more patronize
Very Good
Abubakar Iliyasu Hashim
Federal college of education pankshin affiliated to university of jos
I am highly impressed with your unquantifiable efforts for the leaners, more grace to your elbow.I will inform my colleagues about your website.
Very Good
Oluchi From Michael Opara University
If you are a student and you have not used iprojectmaster materials, you are missing big time! iprojectmaster is the BEST
Excellent
Stancy M
Abia State University, Uturu
I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much iprojectmaster, infact, I owe my graduating well today to you guys...
Excellent
Temitayo Ayodele
Obafemi Awolowo University
My friend told me about iprojectmaster website, I doubted her until I saw her download her full project instantly, I tried mine too and got it instantly, right now, am telling everyone in my school about iprojectmaster.com, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work
Very Good
Peace From Unilag
I cried not knowing how to go about my project but the day i searched online and saw iprojectmaster, i called and got my full project in less than 15minutes, i was shocked!
Excellent
Adam Alhassan Yakubu
UDS
Excellent work and delivery , I promise to share my testimonies everyone in need of this kind of work. You're the best
Excellent
Gbadamosi Solomon Oluwabunmi
Lasu
Swift delivery within 9 minutes of payment. Thank you project master
Excellent
Dau Mohammed Kabiru
Kaduna State College of Education Gidan Waya
This is my first time..Your service is superb. But because I was pressed for time, I became jittery when I did not receive feedbackd. I will do more business with you and I will recommend you to my friends. Thank you.
Very Good

FREQUENTLY ASKED QUESTIONS

How do I get this complete project on DETERMINE THE EFFECT OF WORKING CAPITAL ON THE PROFITABILITY OF HOSPITALITY INDUSTRIES.?

Simply click on the Download button above and follow the procedure stated.

I have a fresh topic that is not on your website. How do I go about it?

How fast can I get this complete project on DETERMINE THE EFFECT OF WORKING CAPITAL ON THE PROFITABILITY OF HOSPITALITY INDUSTRIES.?

Within 15 minutes if you want this exact project topic without adjustment

Is it a complete research project or just materials?

It is a Complete Research Project i.e Chapters 1-5, Abstract, Table of Contents, Full References, Questionnaires / Secondary Data

What if I want to change the case study for DETERMINE THE EFFECT OF WORKING CAPITAL ON THE PROFITABILITY OF HOSPITALITY INDUSTRIES., What do i do?

Chat with Our Instant Help Desk Now: +234 813 292 6373 and you will be responded to immediately

How will I get my complete project?

Your Complete Project Material will be sent to your Email Address in Ms Word document format

Can I get my Complete Project through WhatsApp?

Yes! We can send your Complete Research Project to your WhatsApp Number

What if my Project Supervisor made some changes to a topic i picked from your website?

Call Our Instant Help Desk Now: +234 813 292 6373 and you will be responded to immediately

Do you assist students with Assignment and Project Proposal?

Yes! Call Our Instant Help Desk Now: +234 813 292 6373 and you will be responded to immediately

What if i do not have any project topic idea at all?

Smiles! We've Got You Covered. Chat with us on WhatsApp Now to Get Instant Help: +234 813 292 6373

How can i trust this site?

We are well aware of fraudulent activities that have been happening on the internet. It is regrettable, but hopefully declining. However, we wish to reinstate to our esteemed clients that we are genuine and duly registered with the Corporate Affairs Commission as "PRIMEDGE TECHNOLOGY". This site runs on Secure Sockets Layer (SSL), therefore all transactions on this site are HIGHLY secure and safe!