An Assessment of the Effects of Time on an Organization’s Cashflow
Chapter One
Objective of the study
The objectives of the study are;
- To find out various factors that can impact an organization’s cashflow over time
- To examine the effect of investing cash flow management activities on the financial performance of organization
- To find out the effect of financing cash flow management activities on the financial performance of organization.
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
INTRODUCTION
Cashflows are categorized according to the activities that generate and use cash. From the body of knowledge, such activities are those associated with operating, investing and financing. Operating cashflow involves activities leading to the determination of net profit. As per IAS 7, operating activities are primarily derived from the main income producing activities of an entity. They result from transactions and other events that enter into the computation of net profit or net loss. Some examples are cash receipts from the sale of goods and services, cash receipts from fees, commissions and other services, cash payment to suppliers and employees and cash payments for income taxes. Similarly, FRS 1 explains cashflows from operating activities as the cash effects of transactions and other events relating to trading activities, included in the profit and loss in arriving at operating profit. Alternatively, cashflows from investing activities are cash inflows and outflows associated with the purchase and disposal of productive facilities used by the company and investments in the security of other companies, while cashflow from financing activities include inflows and outflows of cash involved in obtaining cash from external sources for the purposes of financing the company and its operations (Libby et al 2001: 684 – 685). Examples of investing cashflows are payments to acquire property, plant and equipment, loans by the reporting entity and payments to acquire debt instruments of other entities excluding payments for the acquisition or disposal or a movement in liquid resources. Others are receipts from sales or disposals of property, plant or equipment and receipts from repayment of the reporting entities loans to other entities or sales of debt instruments of other entities other than receipts forming part of an acquisition or disposal or a movement in liquid resources (FRS 1 in Alexander and Britton, 1999). Cash inflows in management of liquid resources include withdrawals from short term deposits not qualifying as cash and disposal or redemption of any other investments held as liquid resources. Financing activities are cash proceeds from issuing shares or other equity instruments, cash payments to owners to acquire or redeem the entities shares, cash proceeds from issuing debentures loans notes, bonds, mortgages and other short-term or long –term borrowings, cash repayments of amounts borrowed and cash payments by a lessee for the reduction of the outstanding liability relating to a finance lease (IAS, No. 7). The segregation of cashflow generating activities into the dimensions of operating, investing and financing is to identify how each of them impact organizational performance. This fact exposes the essentiality of cash flow data or information to an organization. From IAS 7, a statement of cashflows, when used in relation with other financial statements gives information which enables users to assess the changes in net assets of an organization, its financial structure (liquidity and solvency) and ability to affect the amounts and timing of cashflows so as to adapt to changing circumstances and opportunities.
CHAPTER THREE
RESEARCH METHODOLOGY
Research Design
The research design adopted in this research work is the survey research design which involves the usage of self-designed questionnaire in the collection of data. Under the survey research design, primary data of this study will be collected from selected staff of Dangote cement plc in Kogi state in order to determine an assessment of the effects of time on an Organization’s Cashflow. The design was chosen because it enables the researcher to collect data without manipulation of any variables of interest in the study. The design also provides opportunity for equal chance of participation in the study for respondents.
Population of Study
The population of study is the census of all items or a subject that possess the characteristics or that have the knowledge of the phenomenon that is being studied (Asiaka, 1991). It also means the aggregate people from which the sample is to be drawn.
Population is sometimes referred to as the universe. The population of this research study will be Seventy-five (75) selected staff of Dangote cement plc in Kogi state.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND DISCUSSION
This chapter is about the analysis and presentation of data collected from the field through questionnaire. The analysis of the data with particular question immediately followed by the presentation of findings.
As mentioned in chapter three, 63 questionnaires were administered and 50 were retrieved and necessary analysis was carried out on them and presented as follows:
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain an assessment of the effects of time on an organization’s cashflow. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of an assessment of the effects of time on an organization’s cashflow.
Summary
This study was on an assessment of the effects of time on an organization’s cashflow. Three objectives were raised which included: To find out various factors that can impact an organization’s cashflow over time, to examine the effect of investing cash flow management activities on the financial performance of organization and to find out the effect of financing cash flow management activities on the financial performance of organization. The total population for the study is 75 selected staff of Dangote cement, Kogi state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
In conclusion, time plays a critical role in an organization’s cashflow. The longer the time period, the more opportunities the organization has to generate revenue and collect payments from customers. However, time can also lead to delayed payments and increased expenses, such as interest and fees. Organizations must have a clear understanding of their cashflow projections, including the timing of payments and expenses, to effectively manage their financial resources. By regularly assessing and monitoring their cashflow, organizations can make informed decisions about investments, expenses, and growth strategies. Ultimately, the ability to effectively manage cashflow over time is essential for the long-term success and sustainability of any organization.
Recommendations
Conduct a cash flow analysis: Analyze the organization’s cash inflows and outflows over time to identify trends, patterns, and areas for improvement. This analysis can help you understand how the organization’s cash flow has changed over time and identify areas where the organization may be experiencing cash flow problems.
Create a cash flow forecast: Develop a cash flow forecast that predicts the organization’s future cash inflows and outflows based on past performance and expected changes. This forecast can help you anticipate potential cash flow issues and develop strategies to address them.
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