Effect of cash conversion cycle on profitability in mtn and globacom
Table Of Contents
- Title page
Certification i
Dedication ii
Acknowledgement iii
Abstract iv
Chapter ONE
INTRODUCTION
- 1.0 Introduction 1
- 1.1 Background Information 1
- 1.2 Problem Statement 6
- 1.3 Research Objectives 7
- 1.4 Hypothesis 8
- 1.5 Significance of the Study 9
- 1.6 Scope of the Study 10
Chapter TWO
LITERATURE REVIEW
- 2.0 Literature ReviewChapter Three:
- 3.0 Research Methodology 30
- 3.1 Description of the Study Area 30
- 3.2 Research Design 30
- 3.3Method of Data Collection 31
- 3.4Data Limitation 31
- 3.5Method of Data Analysis 32
3.
- 5.1 Summative Approaches 32
3.
- 5.2 Simple Percentage 33
3.
- 5.3 Incremental Averages
- 343.6 Test of Hypothesis 34
Chapter FOUR
DATA PRESENTATION AND ANALYSIS
- 4.0Presentation of Data, Analysis of Data and Discussion of Findings 36
- 4.1Data Presentation 37
- 4.2Data Analysis 39
- 4.3Discussion of Findings 41
- 4.4 Test of Hypothesis 45
Chapter FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
- 5.0Summary of Findings Conclusion and
Recommendation 47
- 5.1Summary of Findings 47
- 5.2Conclusion 48
- 5.3Recommendation 48References
Thesis Abstract
Abstract
This research project investigates the effect of the cash conversion cycle on the profitability of two leading telecommunication companies in Nigeria, MTN and Globacom. The cash conversion cycle is a crucial financial metric that reflects the efficiency of a company's working capital management. A shorter cash conversion cycle indicates that a company is able to efficiently convert its investments in inventory and accounts receivable into cash. On the other hand, a longer cash conversion cycle implies that a company takes more time to recover its cash invested in the operating cycle. In this study, financial data from MTN and Globacom will be analyzed to determine the relationship between the cash conversion cycle and profitability. Profitability will be measured using key financial indicators such as return on assets (ROA), return on equity (ROE), and net profit margin. By comparing the cash conversion cycles of the two companies and their corresponding profitability levels, insights into the impact of efficient working capital management on financial performance can be gained. The findings of this research are expected to provide valuable insights for managers and investors in the telecommunications industry. Understanding how the cash conversion cycle influences profitability can help companies make informed decisions about their working capital policies and strategies. By optimizing the cash conversion cycle, companies can improve their liquidity position, reduce financing costs, and enhance overall profitability. Moreover, the comparison between MTN and Globacom will offer a unique perspective on how different companies in the same industry manage their working capital and the subsequent impact on financial performance. This comparative analysis can serve as a benchmark for other telecommunication companies looking to enhance their profitability through effective working capital management. Overall, this research contributes to the existing literature on the relationship between the cash conversion cycle and profitability in the context of the telecommunications industry. By examining real-world data from MTN and Globacom, this study aims to provide practical insights that can be applied by companies seeking to improve their financial performance through better working capital management practices.
Thesis Overview
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</p><p><strong>Introduction</strong></p><p>Working capital management is a very important component of corporate finance because it directly affects the liquidity and profitability of the company. The working capital is known as life giving force for any economic unit and its management is considered among the most important function of corporate management. Due to that, every organization whether, profit oriented or not, irrespective of size and nature of business, requires necessary amount of working of working capital (Achchuthan & Kajananthan, 2013). Working capital management is a simple and straight forward mechanism of ensuring the ability of the firm to fund the difference between the short term assets and short term liabilities (Kajananthan & Achchuthan, 2013). It deals with current assets and current liabilities. There are two basic ways to assess the working capital management of firms.</p><p>They are balance sheet concept and studying current assets and current liabilities Concept of Cash Conversion Cycle (CCC). The Cash Conversion cycle measures the number of days between actual cash expenditures on purchase of raw materials and actual cash receipts from the sale of products or services (Eljelly, 2004). Since every corporate organization is extremely concerned about how to sustain and improve profitability, hence they have to keep an eye on the factors affecting the profitability. In this regard, liquidity management having its implications on risks and returns of the corporate organizations cannot be overlooked by these organizations and hence cash conversion cycle being indicator of the liquidity management needs to be explored as to how it may affect the profitability of the corporate units. Today due to changing world’s economy, advancement of technology and increased global competition among the companies, every company is striving to enhance their profits and for that companies are putting every effort to bring their cash conversion cycle at optimum level to increase profitability.</p>
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