THE ROLE OF FINANCIAL

MANAGEMENT IN A CO-OPERATIVE
ORGANIZATION

TABLE OF CONTENT

Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of content

CHAPTER ONE:
1.1 INTRODUCTION
1.2 STATEMENT OF THE PROBLEM
1.3 OBJECTIVE OF STUDY
1.4 SIGNIFICANCE OF STUDY
1.5 STATEMENT OF THE HYPOTHESIS
1.6 SCOPE OF THE STUDY
1.7 SCOPE OF THE STUDY
1.8 DEFINITIONS OF TERMS

CHAPTER TWO:
2.1 REVIEW OF THE RELATED LITERATURE
2.2 GENERAL REVIEW
2.3 FICNAIL RATIOS AND PROFIT PLANNING
2.4 BUGETING AND INVESTMENT ANALYSIS
2.5 MANAGIN THE FINANCIAL STRUCTURE
2.6 REFRENCE

CHAPTER THREE
3.1 RESEARCH DESIGN AND METHODOLOGY
3.2 SOURCE OF DATA
3.3 PRIMARY
3.4 SECONDARY DATA
3.5 SAMPLE USED
3.6 METHOD OF INVESTIGATION

CHAPTER FOUR
4.1 DATA ANALYSIS AND INTERPRETATION
4.2 DATA PRESENTATION AND ANALYSIS
4.3 TEST OF HYPOTHESIS

CHAPTER FIVE
SUMMARY, FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 SUMMARY OF THE FINDINGS
5.2 CONCLUSION
5.3 RECOMMENDATION

BIBLIOGRAPHY
APPENDIX / QUESTIONNAIRE

CHAPTER ONE

INTRODUCTION
Financial management involves all the activity
of the financial managers concern with the rising of
capital lining cash and credit requirement including
the effective control of financial resources

The activity could be suggested as follows;

1.Converting forecast into planned and budget
2.Planning the appropriate capital structure
3.Raising cash flow outside the business
4.Forecasting the future
5.Investing surplus fund
6.Controlling
accordance

the
with

cash
plans

balance
and

and
with

flow

in

changing

circumstance.

7.With

the

emergency

of

finance

as

separate

field emphasis was more or less on legal matters

such as mergers

FORMATION OF NEW COMPANY DISPOSAL AND CONSOLIDATION

With

the

most

vital

problem

of

the

firm

was

identification of the means for raising capital for

possible

expansion

due

to

the

increasing

wave

in

industrialization. The mobility of fund from the

Areas of surplus to the areas of scarcity posed a lot
of problem. Because of the radical changes which
ochre during the depression of 1930 which culminated
into the failure of many business finance which redirected to bankruptcy, reorganization and liquidity
for profitability under the imperfect perfect
competition continues to be the motivation to
maximize the profit and wealth of the owner. To ague
to maximize profit has led to he study of financial

management of which attribute factor can be

socialized as follows;
(a) Saving
(b) Business growth
(c) Inflation
(d) Competitive

Base on the above background, some through was giving

a financial management to provide skillful planning
control

and

execution

of

financial

management

activity.
The practicing managers are interested in this
study because among the most crucial decision of the
firm are of those which relates to the financial
matters

and

so

are

giving

better

treatments

for

better understanding of financial management which

provide

them

with

conceptual

and

annalistically

insight on the capital fund and using the capital

fund are called financial function of any firm

GOALS AND OBJECTIVE OF THE FINANCIAL MANAGERS

Financial which is the life wire of any business
and as developed in 1900 since it concerns the actual
flow of money as well as any claim against money. The
financial mangers subsequent decision is made in such
more co-ordinate manner responsible for the control
system. The financial managers are concern with;
(a) Financial planning with the bank
(b) Raising of fund
(c) Allocation of fund
(d) Financial controlling of fund
(e) Interpretation

FINANCIAL PLANNING

The involve he estimating and planning of the

future flow of cash receipt and disbursement raising
of fund involve organizing the raising of fund which
involve

the

funding

necessary

for

planning.

The

second is the acquisition of the fund. There are a

wide

variety

if

the

fund.

It

has

certain

characteristic as cost maturity, availability. The

encumbrance of asset and other terms exposed by the
capital.
On

the

bases

of

this

function,

the

financial

managers of a bank must determine the best mix of

finance

for

financial
formulation

the

banking

managers
of

have

policies.

industry.
to
In

take
the

Therefore
the

issue

interest

of

the
of
such

policy is to plane, co-ordinate, motivate and control

activities of the firm, which are responsible of the
efficient financial management of the resources. An
efficient financial management thus is the same as a

valuable aid to the process of decision-making and a

major

contributing

to

the

pale

and

major

contribution to the pale of economic. The principal

responsibility
theory

of

evaluation

financial
of

managers

investment

involves

financial

a
and

dividend decision with the sole aim of maximizing

wealth.

The

financial

managers

studies

the

annalistically techniques and the environment where

financial decision are made.
The financial manager keeps accurate account and
records of, preparing the cost, providing the means
for payment of bills, procuring additional in case of
cash needed. Investing fund in asset and procuring
the

bets

means

of

financing

in

relation

to

the

overall development of the organization. The task of

the financial manager is invisibly faced with problem
with

those

of

profitability,

liquidity

and

risk

10

factor, which influence both internal and external

environment.
Only

sound

financial

decision

based

on

the

analysis, planning and control of activity therefore

can

help

optimized

the

values

of

operational

optimization of the profit and shareholders wealth in

one of those guiding.
Objective

of

business

enterprise,

which

its

allocation of resource and the financial decision for

the financial manager. The financial manager must be
aware

of

sources

of

finding

the

business

and

be

guided by time, selection and combination of those

available. That is the financial manager dilemma and
the

principle

managers

of

dilemma

sustainability.
is

that

of

The

financial

profitability

and

liquidity while sustainability is the principle of

time balancing with asset and liability that is using
short time term liability to financial short term

11

asset and long term liability to finance the long

term asset.

ALLOCATION OF FUND
Wise use of fund is allocating such fund in such
project

or

such

venture

that

will

yield

optimal

return ensuring efficient use of fund. The financial

managers

ensure

the

efficient

allocation

of

fund

among the various uses. The allocation must be in

accordance with the underlying objective of the firm
to maximize the profit in the customers wealth. The
role

of

financial

manager

has

expanded

of

the

management of the working capital to long-term asset

and liabilities. He is concern with ways of efficient
managing
efficient

this

current

asset

profitability

in

relative

order
to

to

the

maximize
amount

of

fund tied up in the asset

12

FINANCIAL CONTROLLING
Financial monitor financial operation to ensure
the cash flow are proceeding according to the plane

INTERPRETATION
The

bank

is

part

of

financial

community.

It

financial management can be fully interpreted only

with

the

contest

by

he

working

of

the

financial

institution and the markets

ORGANIZATIONAL GOALS
Since this project is concern with the role of
financial

managers

in

cooperate

organization,

therefore, it is important to note the goal of any

financial.
Maximization

of

profit.

This

is

the

frequency

encountered goals of any business impact all business

13

believed that as long as they are earning as much as

possible while holding down cost, they are archiving
the goal of profit maximization appears performance.

b.

Maximization

financial

of

wealth

management

is

the
the

main

objective

maximization

of
is

accomplished by maximizing the sum of the present

value of the stream of dividends received and the
present value of the increased in the market values
of the shares of stocks held by the shareholders.
Thus, the apparent wealth maximization is the best
economic objective shareholders as the owns and for
the bank whose primary interest is to customers own.
The

environmental

scope

of

financial

manager

in

executing their job, Financial managers do not have

absolute

authority

responsibilities

their

in

carrying

actions

are

out

their

constrained

by

certain factors beyond their control.

14

THESE FACTORS ARE DIVIDED INTO TWO

a. Internal environment factor the principal factor
in this case is the unavailability or the lack
of human resources and the organizational self
imposed standard.
b. B.

The external environment factor such as the

political
values,
trends

legal
the

and

imperative

framework

economic
custom

that

cultural

climate,

attitude

financial

.It

manager

and

social

technological
is

therefore

should

take

cognizance of environmental factors that affect

their decision.

STATEMENT OF PROBLEM
There

has

been

unprecedented

increase

in

the

quest for the answer of the following questions posed

in order to clarify the duties of financial manager,

15

which is the prospective rank of a student studying

finance. Financial managers do not have authority in
carrying

out

responsibilities

their
their

responsibilities
actions

are

their

constrained

by

certain factors beyond their control. These factors

can be dividrdinto two Internal environment factor
.The principal factor in this case. The [rinc9ipal
factor in the case is the unavailability of human
resource and the organization self imposed standard.
The external environment factor such as the political
legal

firm

economic

work.

climate

Culture

and

technological

social
trends

value.
and

The
the

customers attitude. It is therefore imperative that

financial

managers

take

cognizance

of

the

environmental factors that effect their decisions.

There has been unprecedented increase in the quest

for

the

increase

for

answer

for

the

following

16

questions posed in order to clarify the duties of a

financial manager, which is the prospective rant of
studying finance.
What is managerial finance? How importance is
the

financial

functions

for

the

company.

Are

the

financial mangers responsible for the performance of

certain task? Dose this means that his action are
design to accomplices specific goals. How and when
did the financial archive the firm objective, which
is the finical managers definition of the fare price,
and

how

is

it

related

to

his

firm

return

and

investment capital. One may logically ask, why are we

interested in this cash flow if they do not affect
the

profit.

Why

cannot

the

profit

effect

not

be

taking directly not the account in the analysis? What

tools and techniques are available to him and how
dose he goes about managing his own performance. On a
general scale, do they have any operational meaning?

17

That is how can managers operation use to further

national goals. Having identified these questions,
the

provision

of

possible

answers

to

the

listed

question constitutes areas of possible consideration

of

the

project.

As

stated

that

the

financial

management must find a rational base for answering

the following three questions;
(a) How large should an enterprise be and how fast
should it grow. What should be the composition
of its liability
(b) What

should

be

the

composition

of

its

liability
(c) In what form should it hold it asset board
decision.

The asset question stated above relate to three

board

decision

areas

of

financial

management.

Investment financial managers become important that

18

the primary research conducted on a named company

serves a dual purpose this not only serve as part of
the tools in answering the questions, but is mainly
used to unfold the extent to which the financial
managers

of

company

is

executing

his

duties

according to the project

SIGNIFICANCE OF THE STUDY

The purpose of this project: the role of finical
management in cooperate organization, is to equip the
practicing, finical managers, financial controllers,
and

director

financial

of

finance,

studies

and

treasurers,
readers

student

with

of

basic

understanding of financial decision. The financial

manager

carries

out

financial

decision

maximize

through the following;

(a) Current asses management
(b) Capital budget decision

19

(c)

Dividend decision

(d) Financial decision

CURRENT ASSET MANAGEMENT

The financial manager has every right to manage
the long-term asset and also the duties to mange the
current

assets,

efficiently

to

safeguard

the

fund

against liquidity or insolvency

Investment

in

current

affects

the

firm

profitable liquidity and risk. If the firm doses not

invest

sufficient

funds

in

current

asset,

it

may

become illiquid. But it would less profitability, as

idle current assets would earn anything, in order to
ensure that it would not earn anything. In order to
ensure
funds
should

that
are

neither

invested

develop

insufficient
in

sound

current

nor

asset,

techniques

of

unnecessary
in

fact

managing

it
the

current asset.

20

CAPITAL BUDGETING
It is investment decision of the firm to have
its

refund

investment

in

long-term

project

in

anticipation of expected flow of future benefit over

a period of years. This decision could be either to
mechanize a process, replace a machine with another
modern

type,

selecting

between

machines,

and

induction of new product or business expansion.

These features are;
1.Investing current funds for future benefit
2.The period of inc=vestment which involves long
term activities
3.The potential benefit, which will accrue to the
firm over a period of time.

21

DIVIDEND DECISION
The finical manager must determine the optimum
dividend

- payment ratio. He should consider the

questions of dividend stability, stock dividend and

cast dividends. Financial manager must divide whether
the firm should distribute all profit or retain the
balance.

FINANCIAL DECISION
The financial manager must decide when, how, and
whom to acquire fund from to meet the firm investment
needs.

The

significant

issue

before

him

is

to

determine the proportion of equity capital and dept

capital. The proper balance will have to be struck
between return and risk once the financial manager is
able to determine the bets combination of dept and

22

equity. He must raise the appropriate amount through

the bets available resource.

RESEARCH HYPOTHESIS
Base

on

hypothesis

the
will

certain
be

theoretical

formulated

assumptions,

below.

There

theoretical assumption, which include the established

fact that the level of investment firms undertake and
as such, the level of dept end by firms. Investment
involve additional rest or financial assets and is
usually

measured

in

terms

of

fund

used

in

the

process, this funds include both equity and debt.

Ho: the level of debt financing has a negative effect
on the economy
Hi: the level of financial has a positive effect on
the economy

23

Ho: the level of dept financing has a positive effect

on the performance of the employee

Hi: the level of debt financing has negative effect

on the performance of the employee

Ho: the level of debt financing has not positive

effect on the productivity of a firm
Hi: the level of debt financing has a positive effect
on the productivity of the firm.

LIMITATION AND DELIMITATION OF THE STUDY

The research, may not fail to expose some of the
constraint

or

restriction

we

have

encountered

in

collecting the material for the project. There is no

gainsaying

the

unavailability

of

textbook

in

this

field of study especially in developing country like

is a different.

24

Hence,

inspite

of

the

fact

that

the

published

financial statement by this banks are really seen,

they are equally not comprehensive as regards the
needs of a researcher. Some important information is
not usually available for further information cannot
be overemphasizing. Some claim the compliance with
their management policies not to disclose some vital
information to the public. It is a known fact that
most

banking

Lagos

and

it

industries
is

where

had
most

their

headquarters

decision

are

in

taking.

Reading on this fact, the questionnaire sent to some

of the industries could not come back due to the
irregularities in our communication system.
However,

therefore

the

firm

(union

bank

Plc

Enugu) was referred to after the researcher might

have compared the information available to him in the
respective banking industry that cooperate with him
within the locality.

25

Union bank Nigeria Plc started operation in the year

1917. Union bank if Nigeria Plc Enugu has five (5)
branches in Enugu

DEFINITION OF TERMS
The general ideal of this work The role of
financial manager in a corporate organization looks
into the following perspectives;
Chapters
subject

one

give

from

the
the

general

explanation

historical

of

the

perspective,

organizational goals, and statement of problem, goal

and

objectives.Significance

of

the

study

and

limitation and limitation and research hypothesis

Chapter tow literature review from the general.
Overview,

financial

ratio

and

profit

planning

management of current asset, budgeting and investment

and

management

of

current

asset,

budgeting

and

26

managing the financial and management of short and

medium term.
The financial management involves all activities of
the

financial

capital,

manager

planning

concerned

cash

an

with

credit

raising

of

requirement

including the effective of the control system as the

financial recourses. The activities could be selected
as follows (a) converting forecast into planes and
budget
(b) Planning the appropriate capital structure

Chapter

two,

overview,

literature

financial

reviews

ratio

and

from

the

profit

general
planning

management of current assets, budgeting and financial

analysis. Budgeting and investing. Managing of small
financial strut and mangling f short and long term
financing.

27

Chapter

three

conducted

deals

and

with

consulted

the
from

research
the

methodology

flow.

Personal

interview, secondary source of data, questionnaire

hypothesis test and empirical analysis of the named
company.
However, the chapter four deals with the discussion
of

result

through

financial

ratio

analysis,

hypothesis testing and implication of the result

On the other hand chapter five look into the summary,
conclusion

and

recommendation

respectively

finally

followed by bibliography, glossary and appendix

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