THE EFFECT OF FINANCIAL POLICY ON PROFITABILITY AND GROWTH IN MANUFACTURING INDUSTRIES

THE EFFECT OF FINANCIAL POLICY ON PROFITABILITY AND GROWTH IN MANUFACTURING INDUSTRIES

(A CASE STUDY OF SONA BREWERIES COMPANY PLC)

CHAPTER ONE

1.0            INTRODUCTION

1.1     BACKGROUND OF THE STUDY

          (Newman and logon (1984) defined policy as a standing plan, which is used over time to guide specific action. Effect of financial and policy which is a key policy in industries has been very controversial in profitability growth. Infant they further claim that massive features that we are witnessing in manufacturing industries today are caused by over dependency on effect of financial policy at the expense of other policies like production, personal Marketing and raw materials procurement policies.

          Attempt will be made in this paper to establish whether effect a financial policy on profitability growth in manufacturing industries or not also the research will highlight how policy serves a key role in spelling out, clarifying and testing strategy (Newman and logon 1984).

1.2            STATEMENT OF THE PROBLEM

Sona breweries plc drives from the use of organization personnel to appraise the activities with the industries and the review of the financial and other operation to determine if they accurately and honestly reflect the condition of industries and evaluating the effectiveness of other types on controls.

Before, sona breweries can perform effectively, certain qualities must be possed. They must be independent and the control environment must be objective and competent.

However, it is commonly observed from previous finding, that sona breweries in the manufacturing suffered from low ingredient, not revitalize body and unhealthily influence of the company. The proper and duly expected recognition with the attendant co-operation is not usually expected to sona breweries.

1.3            OBJECTIVES OF THE STUDY

The objectives of this study are:

1.                 To determine how financial policy contributes to the growth of manufacturing industry.

2.                 To find out how financial policy guides the acquisition of company’s assets.

3.                 To investigate how financial policy ensure ploughing back of profit in manufacturing industries.

4.                 To verily financial policy affects divided payment of manufacturing concorns.

5.                 To determine financial policy ensure high  profit ability of manufacturing industries.

6.                 To establish financial policy determines sources of capital of manufacturing industries.

1.4            SIGNIFICANCE OF THE STUDY

The significance of the study is to stress the importance of sona breweries plc as a control in the growth of manufacturing industries.

This study is also expected to show the degree of the manufacturing industry compliance with the laid down procedure.

It will also evaluate the quality of the accounting and internal control system in production that adequacy and competence which will show whether the sona breweries plc can rely in their work

1.5            RESEARCH QUESTIONS/HYPOTHESES

       i.            Does the financial policy contribute to the profit ability and growth of manufacturing industries?

     ii.            Does financial policy guide the acquisition of company set?

  iii.            Does financial policy ensure high profitability of a company?

  iv.            Does financial policy and ploughing back to profit in manufacturing industries?

     v.            Does financial policy affect dividend payment of manufacturing concern?

  vi.            Does financial policy determine the source of capital of manufacturing industries?

1.6            RESEARCH METHODOLOGY

In conducting a research of the nature one goes about doing it using some research instrument that will give a comprehensive knowledge and unroll some important but indden information concerning the study these help to authenticate and validate the information supplied on the study and to serve as an update to relevant contribution in the same field of study.

1.7            SCOPE AND LIMITATION OF THE STUDY

Since the concern of the study is to explore the effect of financial policy on profitability growth in sona breweries plc, the detailed discussion of a particular set up will be attempted and limited to the sona breweries plc as the case study. It is the aim of this study to examine the effect of finance profitability and growth.

END OF CHAPTER REFERENCES

Adeogun, A.T. (1992) “Strategic Policy Decisions in Business Organization, “Institute Of Chartered Accountants of Nigerian Journal.

Okefor, A.F. (1995) Principle of Marketing, Nkpor Osha Baset Printing Limited.

Solomon, E. (1969) The Theory of Financial Management New York Columbia, University Press.

Stanton, W.J. (1981) Fundamentals of Marketing, Japan Megrad Hill Inc.

Vanitorne, J.C. (1979) Financial Management and Polic London, Prentice Hall International Inc.

CHAPTER TWO

2.0            LITERATURE REVIEW

The process of understanding the strategic of a manufacturing company and affirmation of how effect of financial policy is seen as a pursuit of profitability in manufacturing industries actually enhance growth in the industries will be possible by a clear explanation of these police the ingredients of each policy to see the one in the greatest pursuit of profitability growth in the manufacturing industries.

2.1     CONCEPTUAL EXPLANATIONS

          Policies are guideline for executive action. They are meant to ensure that decisions and actions by executive are consistent with the concept of the business objective are consistent with the concept of the business objective and plans and at the same time in keeping with the situation in the environment. They give the decision a certain altitude or discretion in decision making of a marketing policy may state that the goods are to be competitively priced. This would require the market manager to monitor prices of competing goods and adjust the price of it products at what level to fix the price is a decision that can be taken in relation to situation in the environment.

2.2            DESIGNING COMPANY STRATEGY

From the definition of strategy given above, it is seen that when arrival with the forecast of the world in which the company will operate central management shifts to active posture thinking Newman and London (1982) soul designing company strategy involves knowing what are we going to do about it”. What should be the mission of our unique enterprise and what steps do we have to take to fulfill that goal?”

Jordan (1979) affirmed that picking the right mission obviously is crucial. It is also difficult” to be most useful, the master strategy should

a)                 Identify the particular services that is the product domain which the company will promote.

b)                Select the basic resource conversion technology by which these services will be created a technology that hopefully will give the company some differential advantage as a supplier

c)                 With this concept of its economics and social mission determine the major thrust necessary to move the company from present course to the desired one

d)                Establish the criteria and the standard that will be used to measure achievement strategy is said to be completed after all the above dimensions are clarified.

Van Horne J.C (1978) said “A critical judgment in designing strategy is what to accept as unchangeable. Every company processes (or can attract) only limited resources and it has to be careful that the goals he set are double”. In addition to sensing a future opportunity, top management must   realistically assess the cost of grasping the opportunity in term of people outside help money and other resources. It must then decide whether that is something we can do.

2.3            ESTABLISHING POLICY

Strategy concentrates on basis dimension major thrust and overriding policies Newman and Logan (1981) soul” the full implication of the strategy however, is clarified by thinking through the more detailed policy that guides execution of the strategy” central management of each company must actively participates in shaping policy

a)                 Partly because working through the policy implication is an excellent way to check the practicality of a basic concept and

b)                Especially interpreted into the work of the various department of the company.

Almost all companies need policy guidance on product line customer’s pricing and sales promotion production and procurement should be expressed in policy. In the personnel areas policy on selection compensation and industrial relations help build the desire of manpower resource and financial policy rereading allocation and sources of capital shape money resources.

Each of these will be examined in the subsequent paragraphs. Neck P.A (1977) said, “A significant role of policy is to indicate the direction and degree of emphasis the sensitive fields should receive in order to effectively project company’s strategy fields should receive in order to effectively project company’s strategy” attention of an organization should be directed toward change adoption to new opportunities and pressure. Nevertheless, during the time of any given strategy a consistent integrated action is highly important.

Ado Ogun A.J in his article in institute of chartered accountants journal of April June (1992) soul, policy is a major tool or top management for securing a consistent behaviours policy permeates the numerous ???ily activities of a firm and help establish a normal predictable pattern a behavior.

2.4            DEFINING MAJOR  POLICY

a)                Marketing policy-product line and customers Newman and Logan (1981)defined policy as a standing plan which is use over to guide specific action” it serves as a key role in spelling out clarifying and testing strategy” this dimension is applied to marketing policy in an organization to understand its impact. As noted in the a forestation to give it specificity and to put it in more operational terms policy’s is a major instrument for thinking through and sharpening such elaboration. Adelogun A.T in his article ICAN journal of April/June 1992 further soul” a systematic review of key policy that almost always involved in filling in of an organization”

Two dimension that shape the dormant part of every master strategy are the products (or service) to be sold to customer who will but them are policy covering product line and customer.

Sharpening of the product area singled out in a master strategy involves policy regarding the variety of products, product differentiation and frequency of design changes top management should also set up policy regarding the type and location of final consumers the company hopes to reach the distribution system to be used in getting products to such customers Stanton W.J (1981), said market is a total system of business activities designed to plan price promote and distribute want satisfying goods and services to present and potential customer” he further said” the various adjustment to the marketed as started above are vital to success, they have to be nurtured overtimes and they need wise policy guidance for consistency and dependability customer policy is seen to be closely related to many other aspects of a company’s activities. For example the customer’s sought will affect the kind of sales promotion needed the size of plant the plant the type of sales and perhaps production, personnel the need for large account receivable and other phases of operations marketing policy can be said to entail the entire activity of identifying consumers need and wants distributing those product effectively to consumers and monitoring the product to ensure conformity during use with the overall the products to ensure conformity during use with the overall satisfaction to consumer and producers.

2.4.1  MARKETING POLICY-PRICING

          Newman –Logan (1984) said an inescapable issue in building relationship with customers is price inflation changing fashing and technology shortage competition and union contract have impacts on pricing-Newman-Logan (1984) further said that price adjustments are often used to reconcile or balance diverse pressure” getting price is a complicated task. This complexity and sensitivity make it necessary to formulate task. This complexity and sensitivity make it necessary to formulate some general policy to guide executives in their couly action. He classified important issues on which policy guidance are as follow:-

1.                 How must emphasis will be placed on relative price as a competitive weapon?

2.                 What will be the relation of prices to costs of production and distribution

3.                 What adjustment will be made to anticipate responses to our initiative?

4.                 Will all customers be changes the same price? If not on what basis will differences be established.

5.                 What protection will be provide against price changes?

The above sequence of question does provide a general approach to pricing. However the issue and interrelated and only tentative answer can be give to one question until the other are considered. Modern (1987) defined a price as a value or sum of money at which a supplier of a product or service and a buyer agree to carry out an exchange transaction” the value assigned to the amount of money that it is given up to acquire a give quantity of goods or services? Policy that determines price setting has variable which influence price but cannot be controlled by market. These factors are referred to as external determents of the market are called the internal determinant. It is the interplay of price that works to establish product price (Stanton W.J 1981) from the above every company needs policy covering the prices or be changed for its products or services often the setting of price policy is one of the most complex problem of central management.

          Newman-Logan (1984) suggested an ordely approach to pricing to include the following first pricing to include the following first pricing is value as a competitive weapon the relation of our company price to those of competitors should be established at least tentatively to achieve selected marketing benefits. Secondly, the relation between our costs and prices should temper this view point in practice during inflation these cost consolation may dominate pricing policy.

          Thirdly, a consolidated picture of the effect of price on volume cost and price is required. Both short run and long run estimates are needed and particularly the long run view should be matched with broad company strategy.

          Fourthly, the underlying pricing policy which comes out of the preceding analysis must be tailored to a variety of difficult situations important have will be a discount structure and regional differentials which adjust prices to various types of customers.

          Finally, the way price can be most readily adjusted to inflation has to be fitted into the general scheme” pricing is closely connected with many other aspects of managing a firm. it should reflect and support the master strategy with respect to domain sought, the differential advantages to be emphasized and the particular thrusts into new markets or new product lines. At the operating level, pricing policy ties closely to purchasing timing and quality of production. The most intimate connection of pricing is with various other element of the marketing mix” (modern 1987).

2.4.2      MARKETING MIX POLICY\

Marketing mix is the term used to describe the combination of four impute constitute the core of the company’s marketing system the product, the price structure, the promotional activities and the distribution system.  The success and effectiveness of the four elements of the marketing mix (the 4ps) is to produce a synergizing of the co –operation action of discrete agencies such that the total effect is greater than the sum of the effects taken in depending”.

The element in a marketing system are like the components of stereo system they do little very independently. But when properly connected they full the air with beautiful music. That is synergism (stanon 1984). Okafor (1985) said “the marketing mix is the use of the right combination of the 4ps a marketing  at any point in time (product, price, place, promotion) in order to accomplish the firms objectives and to create satisfied customers”

Kotler (1988), is at the view that marketing mixed have to be changed from time to time in response to new factors in the marketing picture. The firm can react to environmental change in expedient or a systematic fashion?.

Modern (1987), defined marketing, mix as the combination of details strategies, tactics, operations, policies, programme, techniques and activities to which resources may be allocated such that the company’s marketing objective are achieved.

There is always an inter– depending within and between each category, which makes up each of the four marketing mix categories. Modern 1987, supported this view when he said the larger the sale force the less the need for heavy advertising expenditure”

Similarly, a product which is marked under a prestigious brand name may enjoy a much longer market than basically and or product which lack a strong brand image.

On the interdependence between each category the size of the sales force (promotion) depends on the distribution channel (place) to the used also is the brand image (product) that must be reinforced by the pricing policy (price) applied to the brand.

Therefore in moving a product from the plant to consumers a variety or activities are under taken and each of these involve an expense. The market mix policy of a company guild the selection of these activity and the allocation of marketing funnels. The aim of course is to create a final package of satisfactions that are alternative to the specific groups of customer identified by customer’s policy” (Newman – Longman 1981).

Service can not be store and they move directly from their creator to the user. Never the less, an array of attributes also surrounded each service here, too is a marketing nix and the customer is attracted by the total package of attributes provided.

The following are the components of a marketing mix policy.

1.           The sales appeals that the company will stress much as customer service and company reputation.

2.           The nature and the use of advertising

3.           The function to the performed by sales representative selection of an optimum combination is crucial.

Boltens (1976) saw optimum combination of the marketing mix calls for empathy with variegated customers group balance against realistic understanding of incremental expenses policy regarding marketing mix should be compatible – hopefully also synergistic with production, purchasing, personnel and financial policies (Newman Logan 1981).

  The following describes the interdependency: stree on quality affects production delivery service related to purchasing leasing increased capitals requirement and so forth.

2.4.3      RESEARCH AND DEVELOPMENT POLICY

Research and development needs very must policy direction it terms of :

(a)              target for new products and for process that are important to the company’s success

(b)             the area in which the company wishes to push back from development works into apply research and possibly basic research and

(c)              the areas where the areas where an offensive effort is called for and areas where a defensive posture make more sense. These guidelines define the mission of research and development.

Part or all research and development mission can be met through the use of outsiders, so policy is needed on subcontracting joint ventures licenses and encouraging suppliers or governmental research.

The scope of research and development is limited by total resources commitments financially a policy maximum often is a percent of gross profit the minimum is a sum necessary to keep up with competitors and within the range expected profit of projects set of organization may also so set limit. By interlacing strategy and research and development policy we harness the potential of modern science to the management of an enterprise (Newman – Logan, 1981).

2.4.4    PRODUCTION AND PURCHASING POLICY

Many firms have separate department for purchasing and production but the basic problem that demand the attention of top management were inter woven that it is simpler to consider production policy and purchasing policy together.

The broad policy issues that need the attention of control management have a profound effect on the destiny of virtually firm. The major production and purchasing policy are as follow:

1.                 Developing the extent to which vertical integration is strategic

2.                 Selecting the general processes to be used in production.

3.                 Selecting total capital and fairly balance

4.                 Producing basic guide for maintenance and replacement.

5.                 Resolving make or buy questions regarding service and supplies

6.                 selecting vendors from whom purchases should be made.

7.                 correlating purchasing production and sales key factors in vertical integration as stated below

(a)              Possible savings resulting from co –ordination

(b)             Elimination of marketing rxpenses

(c)              Lower supply risks

(d)             Effects on patents

(e)              Flexibility

(f)               Volume required for economic production

(g)              Capacity of management to supervisor additional activities

Top management will therefore have production purchasing policy that will encourage vertical integration. Also reduction process policy has to consider.

1)                The choice of technology

2)                Extent of division of labour

3)                Extent of mechanization and automation

4)                Size of decentralization

In production and buying give differences exist in anticipating consumers action or waiting until order are I hand. Many companies carry larger stocks than are require for customer service to secure economic production runs or to obtain discount from vendor procurement or merchant is adjusted in an effort to stabilize production operation but more frequently it is adjusted in anticipation of price changers to assure adequate supply.

Newman and Logan (1984) classified the following wing as important factor that an executive should consider in dealing with turning issue.

1)          Customer requirement for specifically designed merchandize or for point deliveries of statement merchandise.

2)          Economic possible from large production runs

3)          Economic that may be secured from how level production including main tenancies of a well trained labour force more complete utilization of facilities and possible reduction in tax burdens.

4)          Expenses of carrying goods inventory including the storage changes the financial costs the insurance expenses and determine or oblesolescence of merchandize.

5)          Adequacy with which price change may be produced. Demanded at a subsequent period of time.

“Central management should provide policy guidance in this area because action will affect the company’s ability to render good customer service influence it operation cost changes its circulation capital requirement and bring about special losses due to adjustment in inventory valuation (Bunmi, W.J 1952).

Newman and Logan (1984) said” the issue top management should be concerned with are the company’s basis strategy for generating goods and services that its marketing strategy require each part of the total production plan should support the other and also should be consistent with personnel and financial policy, which are the subject of discussion in the subsequent paragraphs.

2.4.5           PERSONNEL AND INDUSTRIES RELATIONS

                   POLICY

       Sketched in appendix 11 is the resource convector model which shows labour as one of the essential resources if a company strategy is to be carried out personnel suited to that strategy must be available on a continuous basis.

       Selecting and developing a workforce that fits company needs raises several question. Policy is regarding the main sources to be tapped the size of staff to be assembled the way equal. Opportunity constants will be dealt with and the extent on reliance promotion from with. At the same time retain the personnel it desires fair competition is vital Newman and Logan (1981) said “policy must deal with

a)                 An optimum dig mend with what other companies are paying.

b)                Provision to keep up with inflation and

c)                 Reasonable internal alignment which also permits recognizing individual merit.

In addition to financial remuneration every company must decide for it washes to go with supplemental benefit vacation holidays, recreational activities and a whole array of protectional aquarist economics risk such as sickness old ages and unemployment should be appraised few companies Lag belia in this areas. The major issue is in what way a company wishes to be a leader it granting special benefit.

Finally, relations with union must be considered the underlying approach of a company, which may be anywhere from a militant policy to union-management co-operation will permits all union contracts within this general policy more specific guideline regarding support to existing union organization will be discussed with the union and the extent to which the company will join in group bargaining and use outside arbitrators need to be clarified.

Newman and Logan (1981) just as viable continuing relationship with customers and supplies are essential to a firm’s existence so, too are its relations with its employees? The ritual of collective bargaining is in no way diminishes the value of relationship with employees that are suited to be miss-management.

2.4.6  FINANCIAL POLICY

          Having discussed policy issue in three vital areas to every business enterprise marketing, production and personnel, finance which is the fourth inherent dimension of business policy as a pursuit of profitability growth in manufacturing sector the ingredient of financial policy will be well analyzed to bring to focus the intending result of the research work.

          The process of understanding the financial policy as a pursuit of profitability growth in my manufacturing company involves a clear explanation of financial policy regarding the following.

1.                 allocating capital

2.                 hurdle rate of return

3.                 capital budgeting

4.                 investment made

5.                 leasing versus purchase of fixed assets

6.                 policy on current assets policy issues on

7.                 profit determination

8.                 ploughing back of profit

9.                 divided policy

10.            sources of capital policy

2.5       ALLOCSTING CAPITAL POLICY

In formulating policy regarding uses and sources of capital attention most pressing problem relate to

a)                 Getting cash (liquid capital) to the most propitious uses says (Newman-Logan) J.C van Horne (1982) said it policy that places deginite limits on the use of capital for fixed asset must be administered with discretion.

2.6       HURDLE RATE OF RETURN POLICY

Adeyanju T. in his topic I can journed of April/June it is an investment guide which stipulates the minimum rate of return that must be anticipated if capital is to be assigned to a proposal” for example, the policy might be that any investment in fixed assets must earn at least 15% annually on initial investment. Then a proposal to buy a machine costing N=1,000 that was expected to result in an average net sewing =N -1,200 per year during its life would be rejected because the 2% return falls below the acceptable minimum. The minimum permissible rate of return should be the average cost of capital to be company.

2.7       CAPITAL BUDGETING POLICY

A company has many more possible investments in fixed asset than it can prudently finance. They issue then become which project to enforce adds which to reject. Capital budgeting is methods for addition to fixed assets are described and analyzed and predictions are made of the amount of investment and the resulting benefit of each proposal. We consider the additional outlays the company will make if the project is undertaken and additional receipts or I (reduced expenditure) that will result from the project, then proposals should be ranked with those showing the highest rate of return to outlay of the top and those with the lowest return of the top and those with the lowest return of the bottom.

Finally, management can proceed down the ran key projects until

a)                 The capital available is exhausted

b)                The rate of return falls below the minimum acceptable rate set by the financial policy of the company. The policy can include that before projects below the out off point are completely rejected intangible benefit should be appraised to decide whether the added advantages are important enough to move a project up into the acceptable list. Similarly intangible cost of projects above the cutoff point should be assessed with and eye for project that might be dropped.

2.8       INVESTMENT MIX POLICY

Some high risk investment and some low risk investment are made by companies the proportion among high, medium and low risk commitments very a lot. It levy and in saint (1979) said “investment mix is used to adopt the strategy all high risk investment make a company too unstable all minimum risk forces liquidation. A healthy arrangement is some mixture (Newman – Logan 1984).

2.9       LEASING VERSUS PURCHASE OF FIXED ASSETS

Analysis of investment proposal may reveal mare attractive opportunities then can be absorbed by the company moral financial structure when this occurs, long term. Leasing instead of buying the fixed assets should be considered other reason that make leasing attractive include. The outlook may be so uncertain that owning your own building is important leasing is a way of reducing the need for typing up capital in fixed assets. The lease can be sales and leased back. A few company have a policy to lease rather than to buy certain type of assets.

Long-term lease create a containing financial burden  in many ways compared to away fixed assets it must not be used anyhow. The general policy of a company recording its investment in fixed assets and capital budgeting should normally apply to properly leased for a long term as well as property that is purchased.

2.10  FINANCIAL POLICY ON CURRENT ASSETS.

a)                 Inventory P.Hunt E.M. Wlliams (1981 said the size and the composition of inventory should be determined by operating needs” the factor to be considered are minimum inventory necessary for uninterrupted operations economic size of purchase orders and of production runs production for inventory to stabilize employment advance purchase to get seasonal discounts and anticipation of price changes and storages of supply inventory policy blending all these consolidation is one of the main issue in wise procurement and enhancement of growth of manufacturing industries. Financial policy dealing with the allocation of capital to competing uses frequently place an overall limit on the size of inventories.

b)                Investment in account receivable. Newman and Logan (1984) said the company’s credit policy should and the execution of its strategy the liberalness in granting credit to customer and in making collection should be consistent with stress placed on credit as a sale appeal. Budgetary limit may then be set for the total capital alleviated to account receivable. Also turnover ratio can be set to check the soundness of account and to avoid future losses from an accumulation of uncorrected accounts.

c)                 Policy affecting the calculation of profit management has significance discretion in how profit is calculated. The three main area where policy guidance is needed on this mater in manufacturing concern are:

       i.            Accounting resources

     ii.            Capitalization disbursement

  iii.            Inventory valuation

A conservative policy is to create large reserves even though this cuts stated earnings (B.V Carlsberg 1972) when cash has been paid out the policy might be to treat. The disbursement as an expenses in the current year and thereby reduce profit or to capitalize and it and increase profit on to capitalize it and increase profit. Also inventory valuation affects profit calculation. If higher value are attached to inventory carried an an asset the higher the current profits and vice versa.

d)      Poloughiing back profit: Avery common practice in  manufacturing companies is to use profit as a source of additional capital is required to finance this expansion rather than distribute profit in the from of dividend and then seek new capital from other sources, many management believe that it is wiser, to use their earnings to meet this need.

e)       Dividend policy in establishing a dividend policy the attitude of people outside the company should be considered as we as those inside Howerd  and Brown (1970) said, A stable dividend policy  will affect not only the income of the present stockholders but also the marketability of stock to new holder”. The dividend policy combined with the announced strategy enable investors to characterize the company in term of growth rate capital gains current income and so forth.

f)       Sources of capital: management is to see that capital necessary to execute the company strategy is provided at a reasonable cost and with a minimum of risk short term creditors such as commercial backs and supplier of material can be used to cover seasonal needs or other temporary requirement. It is risk however to place too much reliance on short – term loans because the capital might be with drawn when buiness condition become unsettled. If used to the maximum needs it will be unavailable for temporary rises in capital requirement” (T Itongreen 1972) Long term loans inform of bonds are natural source of capital for company with relative stable income. Since year a various types of securing may have to be granted to the lender such as mortgage liens.

          The decision to take short – term loan for long – term investment is a financial policy that indeed is a financial policy that indeed after the growth of manufacturing industries.

END OF CHAPTER REFERENCES

Bolten, S.O. (1996) The Theory of Financial Management, University press New York Columbia.

Carsbery, B.V. and Endy, A.K  (1972) Modern Financial Management London, Pengum Books.

Donwa, P. (1984) Lecture Note, Unpublished.

Hunt, P.O. and Williams, C.M. (1981) Introduction to Financial Management, Macmillan, New Your.

Kotter, P. (1983) Principle of Marketing, New Jersey Prentice Hall .

Levy, and Sarnt, (1983) Investment Analysis Principle and Practices Hold Rinchart and Winston, New Yourk.

Modern, A.R (1994) Element of Marketing, Great Britain D.P Publication Limited ]

Newman, and Logan, (1981) Strategy, Policy and Central Management, Cincinal Ohio South West.

Neck, P.A (1987) Small Enterprise, Development Policy and Programmes, I.L.O. Generva.

CHAPTER THREE

3.0  RESEARCH METHODOLOGY

          In conducting a research of the nature one goes about doing it using some research instrument that will give a comprehensive knowledge and unroll some important but indden information concerning the study these help to authenticate and validate the information supplied on the study and serve as an update to the relevant contribution in the field of study.

3.1     RESEARCH INSTRUMENT

          In carrying out this research most of the researcher question tend to demand answer that are qualitative in order to able to able to employ mathematical approach to test the hypothesis of the researcher the answer have to be quantified.

          The aim of this research as specified in the introduction is to find out the relationship between effect of financial policy and growth in company in items of financial policy on asset acquisition, on plough back of profit on dividend payment on sources of capital and financial policy on manufacturing company’s profitability.

          These relationship of the data collected from the research instrument (Questionnaire) show in the appendix 1 during the analysis of data this researcher assigns 1 or 5 point 0.6 or 3 point to the next and 0.4 or 2 point to low rank 0.2 or 1 point to the lowest rank to specify the importance of the responses.

Table III below the compilation of result of result from the questionnaire and the assignment of  the points to them.

RESPONDENT	FINANCIAL	MARKETING	PROCUREMENT	PERSONNEL	PROD
1	1	0.6	0.2	0.4	0.8
2	0.8	0.6	0.2	0.4	1
3	1	0.8	0.2	0.4	0.6
4	1	0.6	0.2	0.4	0.8
5	1	0.4	0.2	0.4	0.8
6	1	0.8	0.2	0.6	0.6
7	1	0.6	0.4	0.2	0.2
8	0.8	0.6	0.4	0.2	1
9	1	0.6	0.4	0.2	0.8
10	1	0.4	0.6	0.2	0.8
11	1	0.4	0.6	0.6	0.8
12	0.8	0.2	0.4	0.8	1
13	1	0.4	0.6	0.2	0.8
14	0.4	0.6	0.8	5.4	1
15	1	6.4	0.6	4	11.8
	13.8	8.0	6.0	5.4	11.8

Source: Field Survey 2011

Source: from the research instrument the whole respondent totaling fifteen result were tabulated and points assigned to them.

          The statistical summation of the point for each item of items i.e financial policy, procurement policy personnel policy and production.

3.2     RESTATEMENT OF RESEARCH

          QUESTION/HYPOTHESES

1)      Does the financial policy contribute to the profitability and growth of manufacturing industries?

2)      Does financial policy guide the acquisition of company asset?

3)      Does financial policy ensure high profitability of a company?

4)      Does financial policy and ploughing back of profit in manufacturing industries?

5)      Does financial policy after dividend payment of manufacturing concern?

6)      Does financial policy determine the source of capital of manufacturing industries?

3.3     RESEARCH HYPOTHESIS

          In other to achieve the objective of this study the following research hypothesis will be tested.

A)      H_o: Dividend payment which is an antidote to growth in manufacturing industries is not due to financial policy.

          H_i: Dividend payment which is an antidote to growth in manufacturing industries is due to financial policy.

B)      H_o: Pouching back of profit which is an indication of growth in manufacturing industries is not brought the effect of financial policy of companies.

          H_o: Pouching back of profit which is an indication of growth in manufacturing industries is brought the effect of financial policy of companies.

C)      H_o: Financial policy does not determine the sources of capacity required by manufacturing industries

          H_i: Financial policy determine the sources of capacity required by manufacturing industries

3.4     DESCRIPTION OF POPULATION AND SAMPLING OF THE STUDY

          The study is based on effect of financial policy as a profitability growth in manufacturing industries a case study of Sona breweries company Plc in Songo otta local government are of Ogun state. Hence  the population consists mainly of the company the financial personnel and top management statement of manufacturing industries.

SAMPLE SIZE

          Attempt was made to cover all the functioning manufacturing industries interview was conducted with the test instrument on randomly selected top management  staff of the sampled companies some middle level management were also sample.

SAMPLING TECHNIQUES

          Questionnaire was designed and distributed to the randomly selected officials of the companies concerned. Since the hypothesis to be tested for each parameter is a one tailed test the research will used Z statistics to test the various business policy and the parameter for the effect of the financial policy which is the interest of the research as a profitability growth in manufacturing industries.

3.5     SOURCES OF DATA COLLECTION

INGREDIENT OF EFFECT OF FINNAICAL POLICY ON PROFITABILITY GROWTH IIN MANUFACTURING INDUSTRIES

RESPONDEDNT	PROFIT FORCE AST	ASSET ACQUISITION	PLOUGHING BACK OF PROFIT	DIVIDEND PAYMENT	SOURCES CAPITA
1	1	0.8	0.2	0.4	0.6
2	1	0.6	0.4	0.6	0.2
3	0.8	0.6	0.2	0.2	0.2
4	1	0.4	0.2	0.6	0.8
5	0.8	0.6	0.4	0.2	1
6	1	0.8	0.6	0.4	0.2
7	0.8	0.6	0.4	1	0.2
8	1	0.6	0.4	0.2	0.8
9	1	0.6	0.4	0.2	0.8
10	0.8	0.4	0.6	0.2	1
11	0.8	0.4	0.6	0.2	0.2
12	1	0.4	0.6	0.2	0.8
13	0.8	1	0.4	0.2	0.6
14	1	0.4	0.6	0.2	0.8
15	1	0.8	0.6	0.2	0.4
	14	9.2	6.6	6	8

Source: From the data collected

3.6     DESCRIPTIVE QUESTIONNAIRE

          Please be informed that the  information supplied will be treated in confidence and used mainly for the purpose of theis research.

1)      Which of the following business policies do you see as a pursit of profitability group of your company

(a)     Financial Policy                                (        ) (      )(       ) (      )

(b)     Marketing Policy                                (       ) (      )(       ) (      )

(c )     Production Policy                              (        ) (      )(       ) (      )

(d)     Procurement                                      (        ) (      )(       ) (      )

2)      Assuming your ranking gives the highest point to any of the above listed policy, please rank again the various ingredient of growth listed under each policy as applicable to your company. Ascribe point ranking between 5 and 1 as above

A)      Financial Policy Variable

(1)     Profit Forecast                                  (        ) (      )(       ) (      )

(2)     Asset Acquisition                                       (        ) (      )(       ) (      )

(3)     Dividend Payment                            (        ) (      )(       ) (      )

(4)     Ploughing back of Profit                             (        ) (      )(       ) (      )

(5)     Source of Fund                                 (        ) (      )(       ) (      )

B)      Marketing Policy Variable

(1)     Pricing                                               (        ) (      )(       ) (      )

(2)     Promotion                                         (        ) (      )(       ) (      )

(3)     Place/Distribution                             (        ) (      )(       ) (      )

(4)     Packaging                                         (        ) (      )(       ) (      )

(5)     People                                               (        ) (      )(       ) (      )

(3)     Assuming your highly favoured ingredient of your company’s growth is financial policy, what was the effect of his your company’s profit in recent years?

(a)     Profit remain constant                      (        ) (      )(       ) (      )

(b)     Profit increase slightly                      (        ) (      )(       ) (      )

(c)      Profit increase accordingly                (        ) (      )(       ) (      )

4)      What was the effects of financial policy on dividend payment in recent years in your company?

(a)     Increase Dividend rate                      (        ) (      )(       ) (      )

(b)     Decrease Dividend         rate                       (        ) (      )(       ) (      )

(c)      Dividend rate remain the same                   (        ) (      )(       ) (      )

5)      What effect your company’s financial policy regarding cost of capital has its capital budgeting processes?

(a)     Favourable effect                              (        ) (      )(       ) (      )

(b)     Unfavourable Effect                          (        ) (      )(       ) (      )

(c)      No effect                                           (        ) (      )(       ) (      )

6)      How often does your company plough back its profit based on its financial policy?

(a)     Annually                                 (        ) (      )(       ) (      )

(b)     Bi – Annually                          (        ) (      )(       ) (      )

(c)      Not at all                                 (        ) (      )(       ) (      )

METHOD OF DATA ANALYSIS AND DESCRIPTION OF TOOLS ANALYSIS

          The test instrument was administered on 10 top management staff Sona breweries company Plc, songa otta, which are the major manufacturing industries in the area under study.

          Additional the same questionnaire was administered on some randomly sample small scale manufacturing concerns in the area.  A total of is people responded positively before commencing computation of these data this is quite encouraging when one consider the total number of 20 key statff of these companies sample.

Table 1 below show the principal officer sampled in the companies manufacturing one thing or the other in the areas.

COMPANY	LOCATION	NO OF PEOPLE SAMPLED	%
SONA BREWERIES CO.	SONGO OTTA	5	25

Table II below gives the spread of officer that respondent

COMPANY	NO OF RESPONDENTS	PECNETAGE OF RESPONDENTS
Sona breweries Co.	5	33.33%

Source:- Analysis of officials that respondent.

END OF CHAPTER REFERENCES

Deepack, L.O (1993) “Management and Industrial Relation in Erope,  America and Japan” Nigerian Journal of Business Administration.

Frank, Harry and Ayua, S.C (1989) “Management in Ancient Civilization” Yoruba and Benin “Research and Technical Journal.

Herbert B.P Lecture Note, Unpublished. University of Ado Ekiti

Link, .P.T. (1992) “Strategic Policy Decision in Business Organization, “Institute of Chartered Accountant of Nigeria Journal. Lagos April/June, pp. 26 -32

Mohammed, Sikiru  (1997) “Purpose of Hurdle rate in capital Budgeting” ICAN Journal Lagos.

Naish, P.J (1998) Management Finance Principle and Practice Boston, Houugnten Miffin Co.

Ojo, Sven (1989) “The Transaction Demand for Cash and Inventory Theoretical Approach” Quarterly Journal of Economics. 65 (November) pp 545 - 546

CHAPTER FOUR

4.0     DATA ANALYSIS, INTERPRETATION AND DISCUSSION OF FINDINGS

         This chapter serves as an outline of the layout of the entire chapter in this chapter in this chapter, an attempt was made to classify responses according to see age and educational level of the respondents analysis of data according to research question are presented. At the end of discussion research question are answered and hypothesis are tested.

4.1     ANALYSIS OF DATA

          The test instrument was administered on 10 top management staff Sona breweries company Plc, area which are the area understudy. Additionally the same questionnaire was administered on some randomly sampled small scale manufacturing concerns in the area. A total of is people responded positively before commencing computation of these data of these data this is quite encouraging when one consider the total number of 20 key staff of these companies sampled.

TABLE 1 below shows the principal officer sample in the companies manufacturing one thing or the other in the areas.

Analysis of Tables

COMPANY	LOCATION	NO OF PEOPLE SAMPLED	%
Sona breweries Plc	Songo Otta	5	25

TABLE II: below given the spread of officer that respondent.

Name of company	No of respondents	Percentage of respondents
Sona breweries Plc	5	25

Sources: Analysis of officials that responded

4.2            ANALYSIS OF THE TEST IN INSTRUMENT

          In carrying out this research most of the researcher question tend to demand answer that are qualitative in order to able to employ mathematical approach to test the hypothesis of the researcher the answer have to the quantified. The aaime of this research as specified in the introduction is to find out the relationship between effects of financial policy and growth in company in term of financial policy on set acquisition, on plough back of profit on dividend payment on sources of capital and financial policy on manufacturing company’s profitability.

          These relationships however will be revealed through the analysis of the data collected from the research instrument (questionnaire) show in the appendix 1 during the analysis of data this researcher assigns 1 or 5 point 0.6 or 3 point to the next and 0.4 or 2 point to low rank 0.2 or 1 point to the lowest rank to specify the importance of the responses.

          Table iii below the compilation of result from the questionnaire and the assignment of the point to them.

TABLE III

POLICIES THAT ARE OF PROFITABILITY GROWTH IN MANUFACTURING INDUSTRIES

RESPONDENT	FINANCIAL	MARKETING	PROCUREMENT	POSONNEL	PROD
1	1	0.6	0.2	0.4	0.8
2	0.8	0.6	0.2	0.4	1
3	1	0.8	0.2	0.4	0.6
4	1	0.6	0.2	0.4	0.8
5	1	0.4	0.2	0.4	0.8
6	1	0.8	0.2	0.6	0.6
7	1	0.6	0.4	0.2	0.8
8	0.8	0.6	0.4	0.2	1
9	1	0.6	0.4	0.2	0.8
10	1	0.4	0.6	0.2	0.8
11	1	0.4	0.6	0.2	0.8
12	0.8	0.2	0.4	0.6	1
13	1	0.4	0.6	0.8	0.2
14	0.4	0.6	0.8	0.2	1
15	1	8.0	0.6	5.4	11.8
	13.8	8.0	0.6	5.4	11.8

Source: from the test instrument the whole respondents totaling fifteen results were tabulated and point assigned to them.

          The statistical summation of the point for each item of interest i.e. financial policy marketing policy, procurement policy personnel policy and production.

          Policy were taken to represent the views of the respondents.

4.3            HYPOTHESIS TESTING

The hypothesis is given thus;

A)      Ho: there is no relationship between effect of financial policy and industry’s profitability growth.

HA: there is a relationship between effect of financial policy and industry’s profitability growth.

          This is one tailed (one side) hypothesis about a population proportion.

The test statistic for this test is the 2 statistic, which is by

          X-Po

              N

Z Pn (1-Po)

          N

Where:-

Po is the prescribed proportion = 90%

X is the scores which is the summation of points = 13.8

N is the number of respondents = 15 see table iii and is the level of significance = 0.05

Z and = 1.645

         

Substituting

Z – 8/15-0.90

0.90 (1-0.90)

          15

= 0.0210.07745 = 0.2582

b)      Ho: there is an inverse relationship between marketing policy and industry’s profitability growth.

          H_i: there is a positive relationship between marketing policy and industry’s profitability growth.

          This is also a one – tailed (one sided) hypothesis concerning a proportion of the population under investigation. The relevant test statistic is Z satiation.

It is given by:

          X – Po

             n

z = pn (1 – Po)1_n

where:

po is the prescribed population = 90%

x is the score which is the summation of point = 8

n is the number of respondent = 5

see table III

$ is level of significance = 0.05

Z  $ = 1.645

Substituting

Z – 8/15 – 0.90

          0.9(1 – 0.90)

                   15

(C ) H_o : There is no relationship between procurement policy and industry profitability growth

H_i :  There is relationship between procurement policy and industry profitability growth

The test is a one – tailed hypothesis . the relevant statistic is z statistics.

          X – Po

              n

Z = Pn (1 – Po) /n

Where:

Po is the prescribed population proportion = 9%

X is the score which is the summation of point = 6

n  is the number of respondent = 15

see table III

$ is the level of significance = 0.05

Z $ = 1.645

Substituting: Z – 6/15 – 0. 90

                     0 – 90( 1 – 0.90)

                                15

                   = 0.510.7745

          = 6.456

d)      H_o: There is no relationship between personnel policy an industry profitability growth

          the test is also a one – sided hypothesis the relevant statistics is Z statistics it is given thus:

x - Po

   n

Where:

Po is the prescribed population proportion = 90%

X is the score which is the summation of point = 5.4

N is the number of respondent = 15

See table III

$ is the level of significance = 0.05

Z $ = 1.645

Substituting Z -5.4/15 – 0.90

0.90(1 – 0.90)

                    15

= 0.5=0.7745

= -6.9722

e)       H_o: There is an inverse relationship between production policy and industry’s profitability growth

          this is a one – tailed hypothesis is too the test static is given by:

          X – Po

              n

Where:

Po is the prescribed population proportion = 90%

X is the score which is the summation of points = 11.8

N is the number of respondent = 15

See table III

$ is level of significance = 0.05

Z $ = 1.645

Substituting : Z – 11 – 8/15 – 0.90

                   0.90(1 – 0.90

                             15

          = 0.113310.7745

          = 1.463

DECISION RULE

Accept H_o: If Z > Z. This implies that we accept

H_i: If the number value of the calculated Z is greater than or equal to Z otherwise reject

H_o for H_a

4.4     PRELIMINARY FINDINGS

          From the calculations the value of Z for H_o Hypothesis for financial policy. Market policy procurement policy personnel policy and production policy are lower than the Z $ going by the decision rule, we reject all the H_o the H_I for all the parameter tested, procurement personnel and production policy are pursuit of profitability growth in manufacturing industries.

          When the various parameter are ranked effect of financial policy got the highest value of 13.8 from the compilation of result from respondent

See table III). The researcher is interested in this parameter effect of financial policy on profitability growth in manufacturing industries.

          The variable of financial policy were also included in the questionnaire where wee responded to by the same officer of the 4 companies sampled for the key company policies above.

          The same vale assigned to various policy were also attached to the ingredient of financial policy as shown in table 10.

COMPILATION OF RESULT

INGREDIENT OF EFFECT OF FINANICLA POLICY ON PROFITABILITY GROWTH INMANAUFACTURING INDUSTIES

Respondent	Financial	Marketing	Procurement	Personnel	Prod
1	1	0.6	0.2	0.4	0.8
2	00.8	0.6	0.2	0.4	1
3	1	0.8	0.2	0.4	0.6
4	1	0.6	0.2	0.4	0.6
5	1	0.4	0.2	0.4	0.8
6	1	0.8	0.4	0.6	0.6
7	1	0.6	0.4	0.2	0.8
8	0.8	0.6	0.4	0.2	1
9	1	0.6	0.6	0.2	0.8
10	1	0.4	0.6	0.2	0.8
11	1	0.4	0.6	0.2	0.8
12	0.8	0.4	0.4	0.6	1
13	1	0.6	0.6	0.8	0.2
14	0.4	0.8	0.8	0.2	1
15	1	0.6	0.6	5.4	11.8
15	13.8	0.6	0.6	5.4	11.8

Source: From the test instrument

4.5     HYPOTHESIS TESTING FOR INGREDIENTS OF EFFECT OF FINANCIAL POLICY

(a)     H_o: There is no relationship between effect of financial policy and profit forecast a manufacturing company.

H_i: There is a relationship between effect of financial policy and profit  forecast of manufacturing company.

          This is a one tailed (one sided) test – Z which is represented by:

          X  – Po

              n

= Pn ( 1 – Po)/n

Where:

Po is the prescribed population proportion = 90%

X is the score which is the summation of point = 14

N is the number of respondent = 15

See table IV

Is the level of significance = 0.05

          Z = 1.645

 Substituting in the above formula we have

Z – 14/15 – 0.90

          0.90 (1.0.90)

                   15

          = 0.031. 07745 = 0.3873

b)      Ho effect of financial policy which is a profitability  growth in manufacturing industries does not guide the acquisition of their assets

HA:   effect of financial policy which is a profitability growth in manufacturing industries guide the acquisition of their assets.

          This is also a one-tailed test z statistics is represented by:

          X-Po

             n    

z = Pn (1-P₆)/n

where:

Po is the prescribed population = 90%

X is the scores which is the summation of point = 9.2

N is the number of respondent = 15

See table iv

Is the level of significance = 0.05z = 1.645

Substituting in the above formula we have

Z – 9.2/25 – o.90

          0.90 (1-0.90)

                   15

= 0.286610.7745

=3.70

(c)      Ho: Plonghing back of profit is not a parameter of effect of financial    

                 policy in a manufacturing industry as profitabilitygrowth.

           H_i: Plonghing back of profit is a parameter of effect of financial   

                 policy in a manufacturing industry as profitabilitygrowth.

          Z statistics is represented thus

          X – Po

              n

where:

Po is the prescribed proportion = 90%

X is the score which is the summation point  = 6.6

n  is the number of respondent = 15

see Table IV

Is the level of significance = 0.005

Z = 1.645

Substituting in the above formula we have

          Z – 6.6 – 0.90

           0.90( 1 – 0.90)

                      15

          = 0.460/0.7745

          5.96

d)      H_o: Dividend payment which is an antidote of growth in

     manufacturing industries is not due to effect of financial policy

H_i: Dividend payment which is an antidote of growth in

     manufacturing industries is not due to effect of financial policy

This is also a one tailed test Z statistic will be used. It is respresented

Thus

X – Po

    n

Z = Pn (1 .Po)/n

Po is the prescribed population proportion = 90%

X is the score which is the summation of point = 6

N is the number of respondent = 15

See table Iv

Is the level of significance = 0.05

Z = 1.645

Substitution in the above formula we have

Z . 6/15.0,90

          0.90(1.0.90

                   15

          = 0.50/0.7745

          = 6.456

e)       H_o: Effect of financial policy does not determine the sources of capital

       in manufacturing industries

H_i: : Effect of financial policy determine the sources of capital in manufacturing industries.

 The above is a one tailed test and Z statistics will also be used. this represent as follow:\

X – Po

    n

Z = Pn (1 .Po)/n

Where

Po is the prescribed population proportion = 90%

X is the score which is the summation of point = 6

N is the number of respondent = 15

See table Iv

Is the level of significance = 0.05z = 1.645

Substituting in the above formula we have

          Z – 6/15.090

           0.90 (1 – 0.90)

                   15

          = - 0.5010.7745

= 6.456

DECISION RULE

          Accept H_o: If  2 > z. this Implies that we accept Ho if the numerical value of the calculated z is greater than or equal to Z other wise reject Ho for Hi

Note that Z in the reference value 

          Z 0.05

4.6     DISCUSSION OF FINDINGS

          From the calculation, the value of Z for profit ability data is 0.3873. this is lower than the reference value of z, which is 1. 645  consequently we reject the H_o hypothesis is for the H_i  hypothesis which states there is a relationship between effect of financial policy as profitability in manufacturing industries.

          Also the value of Z which is -3.70. this is alos lower than Z value which is 1.645. we also reject the Ho hypothesis for ha hypothesis which states effect of financial policy guides the acquisition of assets in manufacturing industries as a pursuit of it profitability growth. Another findings on the ploughing bade of profit data have a calculated Z value of -5 .94 as against the reference value Z. we also reject the Ho Hypothesis for the H_a hypothesis which states plonghing back of profit is aparameter of effect of financial policy that affect profitability growth in a manufacturing industries.

          Also the data for dividend payment has a calculated value of Z to be -6.455.

          This is for lower than the value of Z which is 1.645. This make us reject Ho hypothesis is for the Ha hypothesis, which states dividend payment which is an antidote of growth in manufacturing industry is due to effect of financial policy.

          Finally, the data for source of capital has a calculated Z value of 4. 73. this is also lower+ Z value of 1.645. we also reject the Ho hypothesis for the Ha hypothesis which states that financial policy determine the sources of capital in a manufacturing to bring about their profit ability growth.

END OF CHAPTER REFERNCES

Abiola, R.O (1994) “Management and Industrial Relation in Europe, America and Japan” Nigeria Journal of Business Administration.

Bannol, W.J. (1995) “ The Transaction Demand for Cash An Investory Theorecal Approach” Quarterly Journal of Economics 65 (Noverber) pp. 545.

Us Department of Labour, Bureau of Lbour Statistic (WWW. b/s. gov) Accountants and Auditors.

Reiss, W.A (1996) Role of Accountants and Auditors in Business, Law Review Columbia University Press.

CHAPTER FIVE

5.0                        SUMMARY, CONCLUSION AND RECOMMENDATION

5.1                        SUMMARY

The preliminary findings attested to the fact that control management should have good policies on the key area of business like production, marketing, personnel, procurement or purchasing, research and development and finance.

The ranking given show the importance of these parameters to growth in manufacturing industries. They are interrelated and a filure in one definitely will bring the failure of the business it is therefore a strategic decision in any company to set out policies on these key areas.

The highest ranking goes to effect of financial policy as profitability growth in manufacturing industries. This means the highest number of people sampled favour this as the most important policy to enhance profitability growth in manufacturing industries.

This does not means other key factor are not necessary but they come after the effect of financial policy. The ingredients of this policy are profit – forecast, asset acquisitions, ploughing back of profit dividend payment and sources of capital. The researcher tested various hypotheses for these ingredients and the result showed they have positive relationship to effect of financial policy.

          A good policy decision on each of these ingredients will positively affect the profitability growth of the industry concerned.

5.2     CONCLUSION

          In the light of the about, the research has arrived at the following conclusion in respect of effect of financial policy being as a profitability growth in manufacturing industries.

1.       That profit forecast of a company is derived from effect of financial policy.

2.       That a growing company will acquire more assets to support its expansion resulting from his effect of financial policy.

3.       That when company has effect of financial policy, it will have enough profit to plough back to the business to enhance is further growth.

4.       That dividend payment arising from effect of financial policy is an evidence of profitability growth of a company.

5.       That good effect of financial policy will bring about cheap and reliable source of capital for the business. This enhance its profitability growth.

5.3     RECOMMENDATIONS

1.       Since it is confirmed from the result of this a study, that effect of financial policy as a profitability growth of manufacturing concerns should  as a matter of involve it top management in making this regularly.

2.       Manufacturing companies should train their middle and top management on strategic decision making to enable them be conversantly with policy decision that will affect the profitability growth of the business most especially effect of financial policy.

3.       Employment of professions who are versed in business administration and finance to help in formulating effect of financial policies that will enhance the profitability growth in manufacturing industries.

END CHAPTER REFERNCES

Abiola, R.O Lecture Note Unpublished. University of Ado –Ekiti State .

Ajayi, C.A. (1986) “Financial Control in the Public Sector” Annual Conference of NATA

Herbert, G.H.and Gullet, C.R. (1983) Management MC Graw – Hill New York.

Millichamp, I.E. (1990) Public Sector Accounting and Financial Control. Financial Training, Lagos.

Okafor, A.F (1995) Principle of Marketing Nkpor Osha, Baset Printing Limited.

BIBLIOGRAPHY

Abiola, R .O (1994) “Management and Industrial Relation in Europe, America and Japan” Nigeria Journal of Business Administration Vol. 3 Nos, pp151

Abiola, R.O (1994) “Management in Ancient Civilization, Yoruba and Benin. “Research and Technical Journal Vol. No2, pp1 -12.

Abiola, R.O Lecture Note Unpublished. University of Ado – Ekiti

Adeogun, A.T. (1992) “Strategic Policy Decisions in Business Organization, “institute of chartered accountants of Nigerian journal. Logos April/June, pp – 26 -22

Adeyanju, J (1997) “Purpose of Hurdle rate in Capita Budgeting” ICAN Journal Lagos April/ June, pp 65 - 66

Bannol, W.J. (1995) “The Transaction Demand for Cash an Inventory Theorecal Approach” Quarterly Journal of Economics 65 (November) pp. 545.

Bolten, S.O. (1996) The Theory of Financial Management, University press New York Columbia.

Carsbery, B.V. and Endy, A.K  (1972) Modern Financial Management London, Pengum Books.

Donwa, P. (1984) Lecture Note, Unpublished.

Hunt, P.O. and Williams, C.M. (1981) Introduction to Financial Management, Macmillan, New Your.

Kotter, P. (1983) Principle of Marketing, New Jersey Prentice Hall .

Levy, and Sarnt, (1983) Investment Analysis Principle and Practices Hold Rinchart and Winston, New York.

Modern, A.R (1994) Element of Marketing, Great Britain D.P Publication Limited

Newman, and Logan, (1981) Strategy, Policy and Central Management, Cincinal Ohio South West.

Neck, P.A (1987) Small Enterprise, Development Policy and Programmes, I.L.O. Generva.

Okefor, A.F. (1995) Principle of Marketing, NKPOR osha baset printing limited.

Solomon, E. (1969) The Theory of Financial Management New York Columbia, University Press.

Stanton, W.J. (1981) Fundamentals of Marketing, Japan megrad hill Inc.

Vanitorne, J.C. (1979) Financial Management and Polic London, Prentice Hall International Inc.

APPENDIX: QUESTIONNAIRE

          Please be informed that the information supplied will be treated in confidence and used mainly for the purpose of this research. Mark your answer as appropriately directed by the researcher.

1)      Which of the following business policies do you see as a pursuit of profitability group of your company

(a)     Financial Policy                                (        ) (      )(       ) (      )

(b)     Marketing Policy                                (       ) (      )(       ) (      )

(c )     Production Policy                             (        ) (      )(       ) (      )

(d)     Procurement                                      (        ) (      )(       ) (      )

2)      Assuming your ranking gives the highest point to any of the above listed policy, please rank again the various ingredient of growth listed under each policy as applicable to your company. Ascribe point ranking between 5 and 1 as above

A)      Financial Policy Variable

(1)     Profit Forecast                                  (        ) (      )(       ) (      )

(2)     Asset Acquisition                                       (        ) (      )(       ) (      )

(3)     Dividend Payment                            (        ) (      )(       ) (      )

(4)     Ploughing back of Profit                             (        ) (      )(       ) (      )

(5)     Source of Fund                                 (        ) (      )(       ) (      )

B)      Marketing Policy Variable

(1)     Pricing                                               (        ) (      )(       ) (      )

(2)     Promotion                                         (        ) (      )(       ) (      )

(3)     Place/Distribution                             (        ) (      )(       ) (      )

(4)     Packaging                                          (        ) (      )(       ) (      )

(5)     People                                               (        ) (      )(       ) (      )

(3)     Assuming your highly favoured ingredient of your company’s growth is financial policy, what was the effect of his your company’s profit in recent years?

(a)     Profit remain constant                      (        ) (      )(       ) (      )

(b)     Profit increase slightly                      (        ) (      )(       ) (      )

(c)      Profit increase accordingly                (        ) (      )(       ) (      )

4)      What was the effects of financial policy on dividend payment in recent years in your company?

(a)     Increase Dividend rate                      (        ) (      )(       ) (      )

(b)     Decrease Dividend         rate                       (        ) (      )(       ) (      )

(c)      Dividend rate remain the same                   (        ) (      )(       ) (      )

5)      What effect your company’s financial policy regarding cost of capital has its capital budgeting processes?

(a)     Favourable effect                              (        ) (      )(       ) (      )

(b)     Unfavourable Effect                          (        ) (      )(       ) (      )

(c)      No effect                                           (        ) (      )(       ) (      )

6)      How often does your company plough back its profit based on its financial policy?

(a)     Annually                                           (        ) (      )(       ) (      )

(b)     Bi – Annually                                    (        ) (      )(       ) (      )

(c)      Not at all                                           (        ) (      )(       ) (      )

APPENDIX DIAGRAMS

ENTERPRISE – RESOURCE CONVERTER                 

Customers

 

                                                                                                Capital

ENTERPRISES

RESOURCE

 

CONVERSION

 

Supplier                                                                              Community     Labours

                             Resources Inputs

                             Need satisfaction output

Source; Newman (1984)- Longal strategy, Policy Central Management