EFFECTIVE FINANCIAL MANAGEMENT AS A TOOL FOR ASSESSING EFFICIENCY AND GROWTH IN ORGANIZATION
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EFFECTIVE FINANCIAL MANAGEMENT AS A TOOL FOR ASSESSING EFFICIENCY AND GROWTH IN ORGANIZATION
Chapter one
1.0 Introduction
Finance is one of the most important parts of business management. According to wikipedia.org, finance is the study of fund management.
The construction of a sound business plan, along with the best and correct set of human resources and equipment, is meaningless without adequate management of the organization’s finances.
It is widely acknowledged and accepted that good financial management is the sole key to organisational success: without proper financial management, organisations are unlikely to prosper.
This is because organisations rely on their finances to make proper investments in production, administration, and human capital retention.
According to Wikipedia.org, money management is critical to ensuring the organization’s second future. The notion of financial management has been analysed and discussed by numerous scholars in the subject.
According to Neave and Wiginton (1981), the primary purpose of financial management is to raise finance capital to invest in productive firms in order to maximise the value of the owner’s investment.
Furthermore, the basic goal of financial management is to maximise the financial and economic returns on an investment. Financial management, from the researcher’s perspective, is the process of balancing risk and profitability while striving to maximise an organization’s wealth and stock value.
From the foregoing, the success and survival of every organisation rely exclusively on the appropriate utilisation of finances at its disposal to achieve organisational goals while maximising profits.
1.1 Background of the Study
The First Bank plc was founded in 1894. Headquartered in Marina Street, Lagos, the Bank has an international presence through its subsidiaries FBN Bank (UK) in London and Paris, as well as offices in Johannesburg and Beijing
with around 1.3 million shareholders across the countries. First Bank is listed on the Nigerian stock exchange and operates an unlisted Global depository receipt (GDR) programme.
The Bank offers a wide range of retail and corporate solutions and, through its subsidiaries, contributes to national development in capital market operations, insurance brokerage, bureau de change, private equity/venture capital, pension fund management, registrarship, trusteeship, mortgages, and microfinance.
In retrospect, based on previous experiences of dependable service, the Bank has continued to strengthen its relationships with clients by forming alliances with key industries that have been strategically positioned to benefit Nigeria’s well-being.
First Bank, unquestionably the country’s most diverse financial services organisation, serves over 4.2 million customers in Nigeria from 536 branches.
Because banks are the primary facilitators of funding through credit availability, their financial funds (investments) must be properly managed, with a focus on balancing financial risk and profitability.
With the introduction of numerous bank facilities such as APG bonds, LC abridge facilities, and others that appear appealing on the surface but are risky, financial institutions have realised that success in this precarious business environment necessitates effective planning, budgeting, forecasting, procurement, disbursement, and control of funds.
Financial management includes the evaluation and appraisal of an investment portfolio, working capital management, cash management, and so on.
The idea of achieving organisational growth has been linked to successful financial management. This is because profitability, which is the final outcome of financial management, is related to:
i. Increase the organization’s stock worth.
ii. maximise shareholders’ funds.
iii. Keep the best crop of human resources.
IV. Guarantees future investment, etc.
In the lack of funds, the organisation does nothing but crumble because its financial obligations can no longer be met.
1.2 Statement of the Problem
Effective financial management was viewed as the only way to save bankers from the doomsday scenario created by the Banking Reform era.
The Bank reform era spelled death and unpleasant surprises for most bankers, as their aggressive habit of trading in foreign exchange, treasury bills, opening false credit, and relying too heavily on government deposits was prohibited.
They were compelled to return to the core banking functions of savings and intermediation. This trend shakes bankers out of their complacency and disrupts the relative tranquilly they had.
As a result of the challenge created by this amazing development, bankers have realised that excellent financial management is the only way to survive in a competitive climate dominated by giant banks and the need for transparency.
1.3 PURPOSES OF THE STUDY
The fundamental goal of this research is to identify the causes of business failure. This includes:
i. Identify the importance and role of money in
Business growth at First Bank PIc.
ii. Identify different areas and how to evaluate a firm before investing to avoid failure.
iii. To depict money as the “backbone” of organisation success, and to provide facts to accept or refute.
This research will help First Bank Plc build successful financial management techniques, as well as other organisations looking to increase efficiency and growth. It will also serve as a guide for scholars in this discipline to extend their expertise.
1.4 Relevant Research Questions
The research question is the pertinent question to which the research work will seek to provide solutions.
a. How does efficient finance management affect organisational growth?
b. Is there a link between good financial management and organisational performance and growth?
c. How has excellent financial management shown to be the sole key to organisational success?
d. How vital is excellent financial management to an organisation?
1.5 Statement of Hypothesis
Hypothesis is a crucial tool of inquiry and thus a must-have for research.
Wikipedia.org defines a hypothesis as a proposed explanation for an observable phenomena. It serves as a link between theory and reality.
It is thus a significant research tool, and the following hypotheses have been developed for proof.
HYPOTHESIS:
HO: Effective financial management is not a means of assessing organisational efficiency and growth.
EI: Effective financial management is a technique for maintaining organisational efficiency and growth.
1.6 Significance of the Study
The purpose of this research is to acquire a better understanding of the relationship between good financial management and organisational efficiency and growth.
The research is also important since it will serve as a guide for banks and motivate them to practise better financial management.
1. 7 SCOPE OF THE STUDY.
The scope of this research is limited to First Bank Nigeria Plc’s Jos Market Branch.
It will analyse and evaluate financial management strategies required in an organisation and assess the amount of efficient financial management used by First Bank Plc.
This research study focuses on the importance of competent finance management in improving organisational efficiency.
Finally, this study activity is only intended to be used as an academic research project by the researcher to complete one of the department’s programme requirements.
1.8. Limitations of the Study
This research has a substantial restriction among the restricting factors.
This type of research required enough time to cover the scope, but due to time constraints, the researcher was only able to finish academic course work and complete this research work.
Another limiting aspect is cash, with the lack of funding impeding the pace of this research in terms of information sourcing, among other things.
Nonetheless, the research was conducted in such a way that the main constraint was overcome.
1.9 Definition of Terms
In all literature, there are terms peculiar to a particular discipline; in the process of creating this project, the usage of some phrases becomes unavoidable.
Unfamiliar words are defined as they are used in this research to ensure clarity.
i) FINANCE:- Finance, as defined in this research effort, is the servicing and utilisation of finances by an organisation to reach a specific purpose or objective.
ii) MANAGEMENT:- Management, as previously stated, is the effective utilisation of human and material resources to fulfil the organization’s purpose or objective.
iii) INVESTMENT:- Investment is the current commitment of money or other resources with the expectation of future returns.
iv) FINANCIAL PLAN: A financial plan outlines the organization’s activities or arrangements for using or servicing funds or assets.
V) BUDGETING:-Budgeting is the process by which an organisation plans how to spend the funds available in a specific period of time.
VI) FINANCIAL RISK: Financial risk refers to the potential of something terrible or unpleasant happening to an organization’s fund or investment.
Vii) DISBURSEMENT:- A disbursement of funds is the act of giving out money or releasing funds that are available for a specific purpose or aim of the organisation.
viii) FINANCIAL MANAGEMENT:- Financial management, as defined above, is the effective use of finances to fulfil the organisational goal/objective.
ix) FORECASTING:- In this context, forecasting refers to describing what is likely to happen to an organisation in the future.
x) FINANCIAL FORECASTING: – Financial forecasting, as employed in this research, is a description of what is expected to happen to an organization’s funds or assets in the future based on the information available to them at the time.
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