1.0 Introduction
1.1 General Overview of the Study
The issue of Financial Management Strategies and debt control in the public enterprise is a very sensitive and serious business. It requires a close and detail look into the terms involved in an independence approach so that the consumer of this study would at the end of reading it be able to know all about finance, management strategy, debt control and public enterprise and how they are related in this context so as to give recommendation and conclusion about the managerial methods used by those at the helm of affairs in most public enterprises towards management of finance and debt control. Based on this, we can take the word earlier mentioned one by one in a brief manner.
Management:
According to Estraz “Management as a process represents the tool by which executives of a given organization or company combine the factors of production under a single root designed to attain stated goals or objectives”. For this reason, it involves organization, direction, controlling and planning.
It is important to mention that Claude .S. George Jr. defines management as “the functions that deal with getting things done through others” while Jose P. Leveriza defines management as “the function of planning, coordinating and directing activities in industry, business and government. In other word, it combines people's talents, abilities and services with material resources of the organization in the production of the desire goods and services. This implies that the management of public enterprise affects the economy of a nation.
Strategy:
According to Oxford Advanced Learner's Dictionary, it is the process of planning something or putting a plan into operation in a skilled way or plan that is intended to achieve a particular purpose. Public enterprise uses this to achieve their organizational goal.
Finance:
According to Webster's third international Dictionary, the system that includes the circulation of money, the granting of credit, the making of investments and the provision of banking facilities refers to finance. The English Law Dictionary defines finance as “Money used by a company, club etc. To pay for something”.
However, the encyclopedia of Banking and Finance defines it broadly as, to raise money necessary to organize, re-organize or expand on enterprise whether by sales of stocks, bonds, notes, etc.
On the other hand, Financial Management can be defined as the forecasting, planning, organizing, directing, co-coordinating and controlling of all activities relating to the acquisition and application of a financial resources of an undertaking with the keeping of its financial objectives or the series of management task which are directed to the provision used and disbursement of the economic resources of an entity in ways consistent with the function of the entity (Hamber 1995:61).
Public Enterprises:
Public enterprises according to Thom-otuya are those companies or industries which are engaged in the production of essential goods or services deemed vital to public welfare; therefore, for industries and companies to quality as public enterprises must be affected with public interest. Some industries and companies that are public enterprise are: The Nigerian Railway Corporation, Nigerian Power Holding Company, Imo Transport Company, Rivers Transport Company, NITEL etc. Government mostly owns them though in some cases, private sector participation is allowed by selling minority shares to the psublic but must be owned by one corporation only.
Debt Control:
A company, enterprise, sustains debt or individual when credit facility is extended or granted to another company, enterprise or individual in the course of trying to meet up with set goals, mission and vision of that particular enterprise. in the book of Henry Foyol, he defined control as “an activity that ensures that actual activities are in consonance with planned activities”. It is a generally accepted fact that primary objective of any corporate activity is maximization of profit and continuity, therefore, a public enterprise especially Imo Transport Company (ITC) and River Transport Company (RTC) is not excluded.
Based on this assertion, the researcher finds it pertinent to examine the management of ITC and RTC Finance as well as its debt control through the perimeter of the FINANCE DEPARTMENT/FUNCTION whose role is to establish a financial framework with which the commercial activities of the company can be undertaken. To achieve this, Financial Management Strategies and debt control is very important in any firm despite differences in structure, ownership and size.
1.2 Statement of Problem
For any enterprise to flourish optionally in today's business world there must be in the hatchet of such enterprise, both debit and credit customers. This situation is not restricted only to private enterprises rather it equally affects public enterprises like: Power Holding Company of Nigeria PHCN (formally NEPA), Transport Company of Anambra State, Imo Transport Company (ITC), Rivers Transport Company (RTC) etc, who relate with their customers and rely on them to provide such services that they may not find worthwhile or economically reasonable to embark on. Hence the whole issue ends at finance and debt, this study aims at hewing an indebt look at the activities of a public enterprise using the Imo Transport Company (ITC) and River Transport Company as a case study to know if their activities as regards to management of finance and debt control is a laudable one or not.
1.3 Objectives of the Study
The crux of this study is to examine the strategic roles of the management and board of the Imo and River Transport Companies as regards Management of Finance and the control of debt. In specific terms, the study will identify the areas that the company's financial activities leads to indebtedness, the management procedures and tolls aimed at protecting the finance of the company, pay back period of the invested finance reduction of debt occurrence tendencies and methods of claiming the existing debts. The study has so many areas to identify and they are as follows:
- The study will justify the management tools procedures of ITC and RTC (Imo and River Transport Company) and their method of debt control as public enterprise. The issue of transparency and accountability will also be treated by this study.
- in the same vein, the study being mindful of the fact that the company may not find it easy and possible to operate without being owned by some other companies or individuals, all in the effort to achieve its corporate goals, objectives, missions and visions in a country like ours (Nigeria).
- The result of finding/recommendations of this study will be only enlarge the quality of this work but will act as a blueprint for public administrators, students in school of Business, Governmental bodies and other private and public enterprises as well as the society at large.
1.4 Statement of Hypothesis
This study for obvious reasons will be carried out based on the following hypothesis:
- H1: There is correlation between the government legislation and the operation of the public enterprise.
- H2: There is no correlation between the government legislation and operation of the public enterprise.
1.5 Significant of the Research
This is aimed at giving an insight in the Financial Management Strategies and debt control in the public enterprises with reference to Imo and River Transport Company.
- to the researcher, this work is essential or beneficial hence it is a learning process and also an insight of the need for finance, its management, debt and its control in public enterprise.
- To my successors, the research topic is adequate for the education on the way public enterprises manage their finance as well as the control of its debt for public interest.
- The study will also be a good guide to many future researchers who would wish to improve on what the present research has done such as parishioners' ands Chartered Institute of Bankers of Nigeria (CIBN) as it will serve as a guide for future research work.
1.6 Scope of the Study
This topic is a wide one as Financial Management Concerns almost if not all companies, but the researcher is limited to Imo Transport Company and River State Transport Company. For the purpose of this study, measures of financial management strategies and debt control of public enterprise (ITC and RTC) shall be examined using the available information to fully explain it.
One cannot do away with the fact that it is in fact impossible to go round every public sectors in the country, hence Imo Transport Company and River Transport Company will be used to analyze the financial Management Strategies and debt control in public enterprises as a whole. It is then hoped that the result shall be generalized.
1.7 Research Questions
In the course of this research work,the following research questions were formulated as follows:
- Has budget been one of the management tools used in financial management of your enterprise?
- To what extent has the financial tools been used in the management of your debt?
- Does the management of your enterprise apply the tools mentioned below in their financial management strategies?
- Does the management of your enterprise apply the tools mentioned in their financial management strategies?
- How effective has the application of your management tools been?
- Have management been able to maintain the statutory books of accounts for your transaction?
- Is your accounting system and financial control efficient operate proper?
1.7 Limitation of the Study
There are some factors due to their nature and attendant effect on this research, which limited the researcher from carrying out deeper research work on the area;
- Financial constraints due to present economic hardship.
- The cost of printing, distributing and collecting of questionnaires were enormous likewise the cost of typing and binding the project.
- The respondents were not willing to release some pertinent information for the research work.
- Time was equally a constraint to this work.
- The production of power point was also limitation to this research work.
1.8 Definition of Terms
Break-Even Analysis:
This is an analytical technique for studying the relationship between profit and sales volumes.
Budget:
This may be simply defined as the financial statement of expected performance and cost for a future out with a particular period of time (usually one year) by the Government.
Budgetary Control:
This is a tool, which shows the realistic terms and the effect of adopting particular policy in carrying out plans.
Cost Accountancy:
It is the comprehensive term used to describe the particular conventions techniques and systems, which are employed in a business to plan and control in detail, the utilization of its resources.
Debt Servicing:
This is the process of payment of the principle and interest, which is due in, borrowed funds.
Debt Rescheduling:
It is the process of shifting the repayment of bank to a future date instead of an agreed date.
Decision Tree:
An approach towards seeing risk and probabilities in a problem involving uncertainty or change of event by sketching in the form a true decision profit chance.
Direct Service Cost:
This comprises of interest charges, fee, dividend, payment of principal and capital gain repatriation of external debt.
Financial Control:
This deals with the establishment of standards and then makes provision for reporting any derivation from the norms.
Project/Program Cost:
These are the direct cost of implementation, management and maintaining the external financial project of program with a particular country.
Short Term Loan:
Loans which repay periods are longer (up to 50 years) and the interest rate are lower.
Public Enterprises:
An emprise owned and controlled by the government, maximum contribution for efficient operation of the organization.
Financial Manager:
This is one who plans for the acquisition and utilization of funds to make maximum contribution for efficient operation of the organization. SHAREHOLDER: This means an owner of shares in a business/company.
Public Services:
Government parastates that provide civil services, which are not owned at profit maximizing.
Financial Institution:
This is a place where loans can be obtained (long or short-term) they include banks etc.
Funds:
This is the sum of money saved or made available for a particular purpose.
Loan:
This means things especially sum of money that is being given out or lent out to be repaid with time and interest.
Financial Management:
To manage activities which is concerned with the planning and controlling of the firms financial resources.
Risk:
The exposure of something to danger or the possibility of something bad happening.
Budgeting:
This is the process of continuous but conscious plan of government towards actualization of set targets for a period of one year.
Monetary Policy:
This refers to the combination of measures designed to regulate the value supply and cost of money in an economy (through CBN).
Fiscal Policy:
This is concerned with manipulation of the financial operations of the government with a view of furthering certain economic policy objectives. The instruments used are tax, expenditures, transfer payment etc.
