1.0 INTRODUCTION 1.1 BACKGROUND TO THE STUDY The growth and survival of any company depends on a number of factors.

Aside from the collection of talent resource (people), working with the latest technology and mechanical assets, and performance of a leader, the appropriate management of financial factors that can help the even if there is an economic crisis is also important. Peel and Wilson, ( !!") said that the relative importance of working capital management depends on among others the si#e, industry and e$ternal factors such as inflation, and political legal environment. Working capital management is thus of great importance to many organi#ations. The ability of a company to remain in business for a very long time depends greatly on the efficient management of the components of its working capital. Thus, working capital is important to the financial health of any company of all si#es. This e$plains the fact that firms with inade%uate working capital are in financial strait&acket. Working capital management is the process of managing the flow of money within a specific entity such as an organisation. This involves managing the relationship between a firm's short(term assets and short(term liabilities. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short(term debt and upcoming operational e$penses. Working capital represents operating li%uidity available to a business. Along with fi$ed assets such as plant and e%uipment, working capital is considered a part of operating capital. )t is calculated as current assets minus current liabilities. )f current assets are less than current liabilities, an entity has working capital deficiency. *et working capital is working capital minus cash (which is a current asset) and minus interest liabilities (i.e. short term debt). )t is a deviation of working capital that is commonly used in valuation techni%ues. Working capital + ,urrent Assets ( ,urrent -iabilities A company can be endowed with assets and profitability but short if its assets cannot be readily converted into cash. Positive working capital is re%uired to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short(term debt and upcoming operational e$penses. The management of working capital involves managing inventories, accounts receivable, accounts payable and cash. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short(term debt and upcoming operational e$penses.

Working capital management would involve determination of the appropriate levels of cash, accounts receivables and inventory. This implies that one should determine whether one should carry the current account through e$tension from suppliers, short term basic loans or long term credit. )n summary working capital management involve administration, within policy guidelines of current assets and liabilities. .ue to its importance this study seeks to determine the role of W,/ and its impact on the performance of business organi#ations as it contribute to cost reduction and improvement in profitability using ,oca ,ola 0ottling ,ompany 1hana -imited, ,ape ,oast as a case study. 1.2 STATEMENT(S) OF THE PROBLEM )nsufficient investment in Working ,apital increases the firm's risk of financial distress or insolvency by not having sufficient funds available to pay creditors when the bills become due. )t's worth noting that while Working ,apital /anagement accelerates short( term financial decisions and policies, these will however be framed in the conte$t of the firms overall corporate strategy with the aim of reali#ing its strategic ob&ectives and the primary goal of ma$imi#ing the shareholders2 value. The key problem to be investigated on in this study is the importance of working capital management to the business organi#ation. This research will mainly focus on long term effective working capital management. 1.3 OBJECTIVE(S) OF THE STUDY The study will seek to pursue the under listed ob&ectives3 i. ii. iii. iv. v. To investigate importance of working capital management to ,oca ,ola ,ape ,oast. To assess how working capital management ensures the profitability of ,oca ,ola. To determine the efficiency of working capital management that results in the growth of ,oca ,ola. To identify the credit management policy being followed by ,oca ,ola and how they affect the performance of the organi#ation. To ascertain if ,oca ,ola has an optimum level of Working ,apital /anagement.

1.4 RESEARCH

UESTIONS

)n order to fulfil the ob&ectives of the research, there are %uestions that are important to find answers for, and they are3

i.

What are the working capital policies that can be used by management of the organi#ation and how do they affect profitability of business organi#ation5 6ow does efficiency of working capital management results to the growth of the firm5 6ow do the credit management policies followed by business organi#ations affect the growth of the firm5 What are the adverse effects of inefficient management of working capital on the company5 6as ,oca ,ola ,ape ,oast been able to manage debtors, stock and trade creditors effectively5 its trade

ii. iii. iv. v.

1.! SIGNIFICANCE OF THE STUDY This study will benefit the following groups of people7 8hareholders for the purpose of knowledge. Top management of ,oca ,ola ,ompany 1hana -imited, ,ape ,oast who will use the study to understand what affects working capital management. The employees of ,oca ,ola limited who will use the study to understand what affects working capital management which on the other hand affects its profitability. 9ther researchers who can use the results of this study as a secondary source of data for their own research. 1." SCOPE OF THE STUDY The study will focus on identifying how working capital management can be used by business organizations such as Coca Cola to manage their short term assets and short term liabilities so as to ensure that the firm is able to continue with its operations and that it has sufficient cash flows to satisfy both maturing short-term debt and upcoming operational expenses. It is restricted to the general management of current assets and current liabilities.

1.7 LIMITATION OF THE STUDY The limitations that may be encountered in this research study could possibly include; Time and budgetary constraints. If sufficient time and money is not allocated, it might hinder the completion of this research study. If uestionnaire are used not all the respondents will return their results or gi!e sincere
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answers. "esistance from employees who will be inter!iewed or obser!ed as they are performing their tasks. #ome of the employees might not pro!ide the right information re uired or may not show actual beha!iour when being obser!ed. 1.8 OPERATIONAL DEFINITIONS $ith reference to the study, the under listed terms are clarified as follows; $orking capital - This is the capital or fund a!ailable for carrying on the day to day operations of an %rganization. $orking Capital &anagement - It refers to the efficient management of current assets and current liabilities. Current assets - These are resources that are held or consumed within a short period of time usually one year. They include stock, cash, debtors, prepayments, etc. Current liabilities - These are the amounts failing due to creditors within a year. It includes trade creditors, bank o!erdraft, accruals etc. 'oan (ort )olio * + mixture of shares and bonds held by a firm. )ixed +sset - +ssets, which are not readily con!ertible into cash and are ac uired for long term usage in the firm, e.g. building, plant, machine etc. In!entories - In!entories are stocks of raw materials, works in-progress and finished goods of a company engaged in manufacturing operations. 2.0 LITERATURE REVIEW 'iterature search to be conducted to explore key related theories and concepts on working capital management, to pro!ide the bases for the study. )actors such as the growth of a business, profitability, collapse of business, etc., would be in!estigated to ascertain if it has any links to working capital management. #cholarly articles, books, and other pro,ects that has direct bearing on the study will be re!iewed or studied. 3.0 RESEARCH METHODOLOGY This chapter deals with the research design, the target population of the research study, the sample design and the tools for collecting data during the study. "esearch design and methodology will help to critically e!aluate findings related to the topic. "esearch design - (resent study is descripti!e in !alue as researcher want to know the
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detail aspect of a study on the importance of working capital management to the business organization. #ampling method - "andom sampling method would be selected by applying chit method #ample size - The sample size will be -. respondents. It will include the management, workers and customers. Tools of data collection - In this research the researcher will use uestionnaires to collect data for the study. The uestionnaires will be composed of both closed ended and open ended uestions. These are preferred since they are easy to analyze and are time sa!ing. /ata analysis - +fter the researcher has administered the uestionnaires and collected them, the raw data will be recognized in a way that facilitates analysis. 0uantitati!e analysis will then be adopted after assigning a number to each of the responses. The data will then be summarized using descripti!e statistics in order to de!elop meaningful description of scores. The scores will be defined by coding the data using numerical !alues. /escription tables, pie charts, and bar graphs will be used to show the distribution of scores for each specific !ariable. 4.0 ORGANI#ATION OF THE STUDIES The study has been divided into five chapters ,hapter one is the introduction to the research. )t gives a gist background to the study, the purpose of the study, research %uestions, and significance of the study, delimitations, limitations and also organi#ation of the study. ,hapter two will focus on literature review ,hapter three will contain details of the methodology ,hapter four will deal with the presentation and analysis of data The last chapter gives a summary of salient points in the pro&ect report. )t again gives conclusion to the report and makes recommendation for the study. <eferences Appendices