FINANCIAL MANAGEMENT IN GOVERNMENT OWNED COMPANIES

CHAPTER ONE

INTRODUCTION

1.1 STATEMENT OF THE PROBLEM AND PURPOSE OF THE STUDY

The statement of the problem is to carryout an investigation into the field of financial management practice in government owned companies, with particular reference to Nigeria limited and also highlight the financial problem facing these companies in this problem the main purpose of this study is to:

To identify and examine some factors that militate against successful financial management of government owned companies
To find out why those problem have been difficult to solve and make recommendation and suggestion on how they should be solved.
Explore other areas which in the writers opinion are relevant for effective management of funds.
To recommend generally and specifically the study of financial management.

1.2 RATIONALE OF THE STUDY

Financial management vary necessary according to the nature of the enterprise concerned, once the corporation objective have been defined, the examination of the whole business structure and the related financial need as follows:

The goal and objective of financial management is to maximize the shareholder wealth by this view they should formulating the firms objective in terms of the share holder interesting the main base of financial market is implemented. That mean the firms with better performance will have higher stock price and additional funds can be commonly pressure the aims of financial management is the maximization of the firms value (i.e. profit maximization relative to investment).

To obtain these, some unprofitable short run may be required

Financial management objective of the company is to maximize its value to their share holders.

1.3 SIGNIFICANCE OF THE STUDY

Financial management is very important for the achievement of the firms goal and objective. Because it help the financial manager to carry out their effective project financial management in government owned companies help to see how the field of financial management will contribute to a better improvement of the study of finance, there by minimizing the result of our investment and divided decision by companies.

It helping the finance manger for decision making by planning for futuristic event that may occur for day to day business activities.

1.4 BACKGROUND OF THE STUDY

Nigeria limited, an economic parastatals was incorporated in may 1962 under ordinary company law as a partnership between the form Nigeria government and said machine. The supplied plant to the company and managed the affair until the war broke out in 1967 is only indigenous gas producing company in Nigeria.

After the war in 1970, the company was reactivated and started production on 1stApril 1975. between 1983 and 1984 there was cram shaft broke down which resulted in the stoppage of production. The company received #733.000 from the state government which was later converted into their share and also as loan.

1.5 DEFINITION OF THE TERMS

Financial management may be defined as the function and areas of responsibilities of financial manager such as.

The raising of funds to finance project.
The employment of funds to raised in viable project
The management of the cash flow arising from these project
The return of funds to the funding sources. This fund are raised from financial market and allocated among different uses the flow of fund involved in the operation of the enterprise are managed. The financial management in the provision of fund of time it is required any person responsible for finance in any form, is confronted with the prospects of inflow and outflow at receipts and payment and they arise.