EVALUATION OF CASH AND CREDIT MANAGEMENT POLICIES AS AN INSTRUMENT FOR AVOIDING ILLIQUIDITY AND LIQUIDATIONS (A CASE STUDY OF ANAMCO, ENUGU STATRE

INTRODUCTION
1.1General introduction and background of the study The management of an organization’s capital relates to the finance and investment of non-human resources, that is, physical and monetary assets, for the purpose of maximum benefit in terms of profitability.  According to Frear (1980) profitability is determined in part by the way in which a company manages its working capital elements, especially the company’s management policies in respect of cash and account receivable/payable.  Basically, there would be a drop in profit if the basic element of working capital were raised without a corresponding rise introduction or margins. So one of the principal functions of a financial manager is to provide the arrect amount of each elements of working capital at the right time and in the appropriate place to realize the greatest return on investment. A business which is basically profitable in a capital intensive industry with high level of inventory turnover but does not have an effective/efficient policies for it's’ working capital constituents, especially cash, can easily be stopped by a temporary set-back into liquidation because it has no room to maneuver.  Traditionally, the users of accounting information, especially the external users are interested in notions of solvency and liquidity as criteria for assessing credit worthiness.  In  recent years, cash and trade credit management has become the most important sector of financial management in many trading and manufacturing organizations.  At one time, it was possible for a business to survive without proper cash management policies as well as lay down policies for accounts receivable (trade debtors) as long as it was reasonably profitable.  Accounting to Bennel (1989) prior to 1970’s; trade credit was not a dominant feature of conducting business and procurement of fund were largely easily were not exploited to its fullest use.  Today however, this has not generally been the case and many highly profitable companies have had liquidity.  Problems and some have gone into liquidations, largely because of lack of appropriate cash and credit management policies/techniques.  In these circumstances, business executives now attach a high decree of importance to the cash and accounts receivable management function.  In large organizations, the financial director or treasurer is usually in charge of the management of cash resources and in introducing appropriate systems that will ensure adequate working flow that enable the economy to remain liquid at all times.  Illiquidity problems could be found in all types of companies and not restricted to small inefficient firms.  In some cases, large well known companies have experiences illiquidity problems and in some few instances, liquidation proceedings and eventual demise of such organizations.  The current wave to distress in our financial sectors (Banks and insurance companies) provides a good background to illiquidity problems arising from inefficies in cash and credit management policies in spite of their profitability.  Today, several of these institutions have been liquidated. These developments have naturally had an effect on credit and cash management policies and it is therefore considered to be particularly important that the reasons behind these liquidity problems should be appreciated; using Anambra motor company ltd – a manufacturing organization as a case study.  The choice of this organization is the relevant, which cash and credit management policies bear to its operation. TABLE OF CONTENTSCover pageTitle pageApproval pageDedicationAcknowledgementProposalsList of tableTable o contents
Chapter one: Introduction1.1General introduction and background of the study1.2Statement of problem1.3Objective of the study1.4Research questions1.5Working hypothesis1.6Significant of the study1.7Scope and limitation of the study1.8Historical background of Anamco1.9Definition of terms and conceptsReferences
Chapter two: Literature review2.1Concepts of liquidity and its effect on business operations2.2Issues in cash management2.3Cash planning and control2.4Techniques of cash control2.5Management f receivable (debtors)2.6The use of  accounting ratios in the management of cash and accountsReferences
Chapter three: Research design and Methodology3.1Sources of data
3.2Research population3.3Sample size and sampling techniques3.4Questionnaire design /administration3.5Validity and reliability of instrument3.6Method of data analysis
Chapter four: data presentation, analysis and interpretation of data4.1Analysis and discussion of research questionnaires 4.2Test of hypothesis
Chapter five: summary of findings, conclusion and recommendation5.1Summary of findings5.2Conclusion5.3RecommendationsReferencesAppendixQuestionnaires