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Title Page





Table of Contents



  • Preamble
  • Brief History of the Company
  • Statement of Problem
  • Objectives of the Study
  • Scope of the Study
  • Research Methodology
  • Relevance of the Study
  • Statement of Hypothesis
  • Limitation
  • Definition of some Terms


  • Objectives of Cash Management
  • Survival
  • Functions of Cash Management
  • The Need to Manage Cash
  • Why Hold Cash
  • Pre-requisite for Effective Cash Management
  • Process of Cash Management
  • Managing the Cash Flows
  • Ascertainment of Minimum and Maximum

Cash Holding

  • Investment of Excess or Idle Cash
  • Responsibility for Cash Management
  • Financial Ratios Associated with Survival
  • Limitations of Financial Ratio



  • Introduction
  • Research Sampling
  • Source of Data
  • Data Analysis



  • Data Presentation
  • Test of Hypothesis
  • Evaluating the Effectiveness and Efficiency of

Cash Management



  • Findings
  • Recommendations
  • Conclusion




Nigeria Bottling Company PLC (NBC), like any other organization requires adequate cash at all times to meet different needs. Cash adequacy derived from the proper planning, monitoring and control of its cash resources is vital for the smooth operation of the organization. The planning, monitoring and control of cash resources are quiet important when we have to consider the topic of the research work under review, the effectiveness of which is crucial to the attainment of the set objectives and survival of the company. Poor cash management has some negative implications for the firm with regards to such factors as the disruption of production activities and diminishing profit.

It is on this premise that this study is aimed at evaluating the effectiveness of the cash management efforts of NBC PLC and also to validate the long established theory by economists that profitability has a significant impact on company’s survival.

The study comprise of five chapters. The chapter one is about the background information, defines the problem the study was aimed to address and states the objectives, relevance, scope, limitation and hypothesis. Chapter two focused on the relevant literature on cash management. Chapter three reviewed the research methodology adopted in the study. Data collected through different means are presented and analyzed in chapter four including the test of hypothesis. In Chapter five, we evaluated our findings, and made the due recommendations.

It is hoped however, that the outcome of this study particularly the findings and recommendations will be of benefit to companies that seek to improve on their cash management activities.



The efficient and effective utilization of the resources of an organization is important if such an organization is to achieve its set goals and objectives. As it is the case that resources are known to be scarce relative to demand, organizations and indeed all consumers strive to maximize the benefits that can be derived from the usage of the resources. Thus, organizations manage key resources required in their day-to-day operations to ensure ready availability, proper utilization and avoidance of waste. Cash is one of such resources that has to be handled adequately if organizational activities are to be carried out without disruptions.

Cash is the money which a firm holds to operate its business and also to meet its obligations as they fall due. Cash includes coins, money in an organization’s bank account as well as cheque. Non availability of cash and its components simply implies that there is no cash. It is the most liquid, significant current asset and also the basic liquid, significant current asset and also the basic input that an organization needs to keep the business running on a continuous basis. It determines the survival of an organization. Practically, companies do go bankrupt and sometimes even go out of business not because they are not making profit but rather as a result of non availability of cash and/or its components. Cash is however subject to more frequent changes than any other assets and therefore poses more problems of control. Hence, the need for effective and efficient cash management especially in this period of inflation to ensure survival.

Cash management has to do with “managing the monies of the firm in order to attain maximum cash availability and invest idle funds” – Van Horn (1983:356). Cash management activity is usually carried out by the treasures office. It involves the management of cash flows into and out of the firm, cash flows within the firm and cash balances held by the firm at any point in time by financing deficit on investing surplus fund. Hence cash planning and control as well its effect on the organization’s survival is an important issue to almost any type of organization.

The ideal cash management system will depend on the firm’s products, competition, organizational structure and options available.

It is pertinent to state at this juncture that cash could be held for precautionary motive, speculative motive and transactionary motive. The main objective of cash management is to maintain adequate control over cash position, to keep the business sufficiently liquid and to use excess cash in some profitable venture. Alternatively, the aim of cash management is to ensure that just the right amount of cash is held at any particular time to meet its various usages.

Thus a firm should emphasize efficiency in the management of cash so as to overcome the difficulty in the economy which now prevail in Nigeria in particular and the developing countries in general.



The Nigerian Bottling Company (NBC) Plc was registered in 1953 and had its first plant in Nigeria in Lagos precisely at Oyingbo, Ebute-Metta, which is where we now have Mainland Hotel. The need for more markets for their products which would invariably lead to more profit, raw materials and exchange of technical know-how by Leventis Group in London which lead to the creation of a Bottling Company in Nigeria which was to be called Nigerian Bottling Company (NBC). The Nigerian Bottling Company is the largest group in the private sector in terms of size and geographical spread of operations. Its main objective is to make profit which can only be achieved by making the products available in large quantities.


  • Production and Marketing Activities of the Company

Nigerian Bottling Company is Nigeria’s number one bottler and manufacturer of soft drinks. Its brands include Fanta, Sprite, Bitter Lemon, Fanta Lemon, Coca-Cola, Fanta Apple, Eva Table Water, Linger Ale, Fanta Tonic, Fanta Soda, five Alive etc. Although NBC Plc has stopped the production of some of these brands.

The major raw materials used by NBC Plc are carbonated water, sugar, phosphoric acid, sodium benzoate, caramel colour, flavouring, ascorbic acid, sunset yellow etc some of these materials are imported.

The company has production stages ranging from sorting, washing, inspecting bottles to the production of syrup, warehousing and dispatching of the products to the consumers. NBC Plc is the only bottler of Coca-Cola products in Nigeria and one of the largest in the world. It is also the largest manufacturer of carbon-dioxide (Co2) used to carbonate the favourite soft drinks.

The taste and quality of these products are the same all over the world. Nigerian Bottling Company (NBC) Plc is a market leader in the soft drink industry.



It is almost impossible to have a manufacturing concern that does not encounter cash problem. This problems are aggravated today in Nigeria by the economic crisis and various government policies which directly or indirectly affect the cash that a firm holds at any point in time. This makes it mandatory for firms to manage their cash efficiently to ensure an optimal level of cash.

Firms are always faced with the problem of how much cash to hold in a particular period and when to hold small or large amount of cash. This however, is as a result of the fact that holding too much cash makes the organization loose the profit that would have accrued if such excess cash was invested. Similarly, insufficient cash can disrupt the activities of the firm. It is in light of this that the study is being carried out to strike a balance between holding too little cash and holding too large amount of cash, in other words we are trying to determine the optimum cash balance or level which is the point where cash management is efficient.

Following from the above the study seeks to answer the following questions.

  1. What is the cash policy of Nigeria Bottling Company (NBC) Plc.
  2. Is there an optimal cash level?
  3. Does this optimal cash level ensure profitability of companies?



As it was mentioned earlier, the business environment is quite dynamic. The success or failure of any firm depends to a large extent on the cash position of the organization. Since it is true that the importance of cash cannot be over-emphasized as cash is used to meet obligations as they fall due and also transact business on a day-to-day basis.

The objectives of this study therefore are

  1. To draw conclusion and make recommendations for improvement on the company’s cash management where necessary.
  2. To determine whether there is a relationship between profitability and survival of the business.
  3. To determine whether there is any relationship between liquidity and survival of the business.
  4. To establish and evaluate the efficiency and effectiveness of cash management in the organization.
  5. To assist management in establishing the optimum cash balance because it is the point where cash management is efficient.



As a result of the limited time available for this research work and the insufficient fund at the disposal of the researcher, this study will cover relevant literature on cash management with the aim of determining its relevance to the survival of the organization.

The evaluation of cash management using Nigeria Bottling Company Plc as a case study in order to validate the theory that the level of survival of a company depends largely on the effectiveness and efficiency of the management of cash.



The study utilizes questionnaire designed to collect necessary information with respect to cash system in the company, the questionnaire is also designed to obtain information that cannot be disclosed in the financial reports.

Oral interview will be conducted with top management staff of the organization.

Secondary data will be used to obtain information from the company’s books in relevant areas, records, library and journals.




A good number of organizations in Nigeria are currently passing through a period of economic recession as a result of the inflationary trend and particularly too, as a result of cash mismanagement or misappropriation of funds within such organization. In an attempt to restore their survival, this study is conducted to examine benefits of

  1. Potential investors who are those capable of putting money for profit into any enterprise, therefore such investors want to be sure that there is proper management of cash in the organization before they invest their money in such organization.
  2. Creditors are those who have provided loan capital, credit facilities and goods to the company with the understanding that payment will be deferred to a future date, they want to be sure that the company is liquid enough to meet its short term obligations and still have enough cash to continue in operation.
  3. The government needs to know the financial position of the organization for tax purpose, that is to assess the tax liability of the company.
  4. Investors are concerned with the value of their investment and the income derivable from the investment.
  5. Employees of the company need to know how efficiently and effectively the financial resources of the company is being managed to assess the level of job security as well as their pay.
  6. The public needs to know also how the impact of management of cash resources of an organization is managed so as to be able to improve on the conditions of the immediate environment where the company operates.



In the course of this study the following hypothesis have been formulated.



That there is no positive relationship between profitability/liquidity and survival of a company.


That there is a positive relationship between profitability/liquidity and survival of a company.




In the course of carrying out this research work we may encounter some universal factors that may militate against achieving the aim of the project such as financial constraints, time constraint and of course the inability, to have access to some key officials of the company and data termed  “classified data”, etc.

In addition, we may encounter limitations such as inaccurate statistical data, sample size, standard error etc.



Cash                   –      This is the standard medium of exchange and it provides the basis for measuring all other items. Cash consist of currency (bank notes and coins) and bank account balances, etc.


Cash Management:     This is the critical task of deciding the volume of funds and the speed with which they travel through the system.


Survival              –      This relates to the ability of an organization to earn returns on resources or assets invested and ability to honour its debt obligations as they fall due.





  1. Keown, A. J. et al (1986), “Basic Financial Management” Prentice-Hall, New Delhi, 3rd


  1. Osaze, E. B. and Anao, A. R. (1990), “Management Finance, Uniben Press, Benin


  1. Pandey, I. M. (1993), “Financial Management”, Vikas Publishing House, New Delhi, 6th Revised edition.


  1. NBC Plc., “Monthly Newsletter, 19 March, 2008, Special edition.


  1. Van Horne, J. C. (1983), “Financial Management and Policy”, Princeton-Hall Inc. Englewood, Cliffs, N. J.




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