THE IMPORTANCE OF EFFECTIVE FINANCIAL MANAGEMENT TO THE OVERALL SUCCESS OF AN ORGANIZATION
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY: Planning one's finances requires making efficient use of one's resources (Kotze et al, 2021). Nearly all endeavors necessitate the application of financial resources. Since financing is required for the purchase of most things, there must be some form of financial management. It is impossible to amass financial resources and then employ them in any way (Nwonye, 2021).
First and foremost, financial planning entails anticipating the importance of financing, operating, and financial policies on the organization's future position and putting in place the appropriate measures that may be required (Kunene, 2021). The decision pertaining to the financial planning centers on the nature, extent, and make-up of the capital funds. It is a description of the management of capital resources, which includes the decision regarding the ratio of debt to equity (Kotze et al, 2021).
In the same way that fuel is essential to the operation of a motor vehicle or other type of running machine, financial planning is essential to the management of any corporation. Regardless of the structure, ownership, or size of the financial department of the company, there is a need to ensure that all aspects of financial planning and control in an organization are carried out to the highest possible degree of effectiveness. In doing so, it is possible to become more versatile and increase one's proficiency in financial matters (Kunene, 2021).
When it comes to the planning and making of financial decisions for the corporate firm, the financial management plays a very important role. The individual who is in charge of the company's finances and who holds the position of financial manager is accountable for those responsibilities (Nwonye, 2021). It is due in large part to the contribution that he or she makes to the company's ability to realize its corporate objectives, which includes shaping the corporation's financial future.
1.2 STATEMENT OF PROBLEMS
We are living in the days of economic fluctuation and recession, in variably inflation has become paramount and the order of the day in so many economics. Banks are folding up, while those in operations are within the time (Kotze et al, 2021). There are clashes in the global stock market, most investors have incurred financial losses, banking merger and acquisition is not yielding much fruit as expected the prospective investors are afraid to invest, the investment trend is not stable, the financial experts failing in their professional duties in the economic crunch is harder (Kunene, 2021).
1.3 OBJECTIVES OF THE STUDY
The general objectives of this topic is to look at effective management of finance and it importance in success of business organization. In view of this, the following are the objectives of this study;
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At the end of this research work, the student should be able to know how effective management of finance lead to the success of organizational growth.
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To enable the bank maximize profit and minimize cost.
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To enable the bank reach the customers satisfaction.
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It enable the effective survival of organizational image.
1.4 RESEARCH QUESTIONS
(i) Does a financial manager carryout financial planning in the organization?
(ii) How does financial planning affect the performance of organization?
(iii) Does organization recognize the performance of its financial managers?
(iv) How does financial manager perform his duty in the organization?
(v) Is there any problem incitation against financial planning system in your organization?
1.5 RESEARCH HYPOTHESIS
The research hypothesis is assumption made on a statement, the hypothesis are statement of uncertainties.
H0: NULL hypothesis
Hi: Alternative hypothesis
H0: importance of effective management of finance does not lead to the success of business organization.
Hi: importance of effective management of finance leads to the success of business organization.
1.6 SIGNIFICANCE OF THE STUDY
The significance of the study lies on the information which I generate to policy makers, planners and interested scholars, which I know will help the further researchers in the related field. At the end of the study, one would have contributed his quota towards the understanding of the reasons why financial planning and control is very important in an organization.
The study will also serve as an eye opener to the generality of the people as regards to financial planning and control.
1.7 SCOPE OF THE STUDY
Financial planning is a very wide topic, but the researcher’s work will focus on it as a tool of achieving corporate profitability as it affects organization in general and united bank of Nigeria Plc in particular for the period of (4) years (2011 – 2015).
1.8 LIMITATIONS OF THE STUDY
(i) FINANCE: Due to the present situation in the economy, that is cost of living is very high, the researcher was faced with problem on how to source fund to finance this research work.
(ii) TIME FACTOR: Time constraint was another area, because the study was conducted when the staffs were at their duties.
(iii) ATTITUDE OF THE RESPONDENT: This constitutes a problem because some of the staff rejected filling the questionnaire.
1.9 DEFINITION OF TERMS
CURRENT ASSET: This is a balance sheet item which equals the sum of cash and cash equivalents, accounts receivable, inventory, marketable securities, prepared expenses and other assets that could be converted to cash in less than one year.
FIXED ASSET: It is a long term tangible piece of property that a firm owns and use in the production of its income and is not expected to be consumed.
CORPORATION: This is a business whose article or incorporation has been approved in some states.
FINANCE: The study of how people allocate their assets overtime under conditions of certainty, and uncertainty.
FINANCIAL MANAGEMENT: Means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise.
It means applying general management principles, to financial resources of the enterprise.
ACQUISITION: A corporate action, in which a company buys most, is not all of the target company’s ownership stakes in order to assume control of the target firm.
PROFICIENCY: Advancement in knowledge or skill rather than quality or state of being proficient.
MERGER: The combining of two or more companies generally by offering the stock holders of the company securities in the acquiring company in exchange for the surrender of their stock.
VERSATILE: Capable of doing many things competently. Having varied uses or serving many functions.