APPRAISAL OF INVENTORY MANAGEMENT AND VALUATION IN THE COMPANY


CLICK HERE TO GET THE COMPLETE PROJECT »

APPRAISAL OF INVENTORY MANAGEMENT AND VALUATION IN THE COMPANY  (A STUDY OF NIGERIAN BREWERIES PLC 9TH MILE CORNER ENUGU)  

ABSTRACT:          

This study captioned an appraisal of Inventory Management and Valuation in manufacturing companies in Nigeria. A Study of Nigeria Breweries Plc 9th Mile Corner embarked upon with the view to critically appraising the efficiency of inventory management and valuation in demerits as it concerns manufacturing companies. Reliably, manufacturing companies cannot exist without stocks. Therefore, it is good for every meaningful manufacturing company to take record of its stock. This is because a little deviation form the appropriate way of stock valuation and management will lead to material wastes, reduction in profit and loss of goodwill. Specifically, the aims of this study are; (i) to appraise the management of inventories in terms of merits and demerits as it concerns manufacturing companies and Nigeria Breweries in particular (ii) to ascertain the extent of application of stock valuation methods in manufacturing companies (iii) to ascertain the effect of various stock valuation methods on the reliability of the financial statement (iv) to determine the effects of poor storage spaces, under or over-stocking and non-store record keeping. It is also the objective of this study to make suggestions in a view to helping to solve the problems.

TABLE OF CONTENTS 

Title Page i

Certification ii

Dedication iii

Acknowledgement iv

Table of Contents v

List of Tables viii

Abstract x

CHAPTER ONE: INTRODUCTION

1.1 Background of the Study 1

1.2 Statement of the Problem 3

1.3 Objective of the Study 4

1.4 Relevant Research Questions 5

1.5 Research Hypotheses 5

1.6 Significant of the Study 6

1.7 Scope and Limitations of the Study 6

1.8 Definition of Terms 7

References 8

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 Background Information of Nigerian 

Breweries Plc 9

2.2 Meaning and Classification of Inventories 11

2.2.1 Raw Material Inventory 12

2.2.2 The Work-in-Progress Inventories 12

2.2.3 Finished Goods Inventory 13

2.2.4 Supplies Inventory 13

2.3 Inventory Management 14

2.3.1 Stock Purchasing 14

2.3.2 Inventory Holding/Storage 16

2.4 Stock Utilization 20

2.4.1 Stock Insurance 20

2.4.2 Stock Coding 21

2.4.3 Stock Taking 22

2.4.4 Periodic Stocktaking 22

2.5 Stock Valuation 23

2.5.1 First-in-First-Out (FIFO) 24

2.5.2 Last-in-First-Out 25

2.5.3 Weighted Average Cost 26

2.5.4 Standard Price/Cost 27

2.5.5 Lower of Costs/Market Value 28

References 29

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Sources of Data 30

3.2 Research Design 31

3.3 Population/Sample Techniques 31

3.4 Administration of Research Instrument 34

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Data Presentation 35 

4.2 Test of Hypotheses 46

4.2.1 Test of Hypothesis One 46

4.2.2 Test of Hypothesis Two 49

4.2.3 Test of Hypothesis Three 52 

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings 56

5.2 Conclusion 58

5.3 Area for Further Study 60

Bibliography 61

Appendix 62

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

It has been observed over the year that inventories constitute the most significant part of current assets of manufacturing companies in Nigeria and the world in general, moreover, in most industrial outlets raw material inventories account for over 50% of company’s cost of production. It is argued that a considerable amount of invested capital are locked up in stock while the cost of keeping (holding) these stocks amount to about one-quarter of the value of the stocks.

Further in the 1930s, most businesses in Europe and America experienced great slumps. This business slump was as a result of stock mismanagement and valuation. It was during this period the businessman coined the statement “stocks are the graveyard of any business”. The successor failure of any business depends in their level of stock management and valuation.

According to the statement of accounting standard (SAS) No. 4, 1986, “Appropriate classification and accurate determination of the quantity and cost of stocks are necessary for proper determination of                                                             the result of the operation of an enterprise and for the presentation of current assets in its balance sheet”.

Further, Olojede 1996, said that in this ha time any good management will want to avoid two danger points usually associated with stock control.

These are:

(i) That of inadequate stock which disrupt production and loss of sales and good customers and

(ii) Excess stock which constitute carrying costs and obsolescence risk.

As far as manufacturing companies are concerned stocks exist in various form; raw materials work-in-progress, finished goods and engineering spare parts/consumables. The stock of raw materials, work-in-progress and engineering spare parts/consumerable facilities production, which stock of finished goods is required for smooth marketing operation. Excessive investment in stock will cause unnecessary tie up of the firms fund increase in carrying cost (cost of keeping stock), and risk of liquidity while under-stocking will cause production hold-ups failure to meet delivery commitments and possible reduction in profits. Therefore, the aim of stock management should be to avoid excess and inadequate levels of stock but to maintain sufficient stocks for the smooth production and sales operations. 

Infact, this study will seek to identifying and appraise the various stock management and valuation methods in manufacturing companies and in Nigeria Breweries in particular.

1.2 STATEMENT OF THE PROBLEM.

Inventory management and valuation is a matter of observing the standard stock accounting techniques which is aimed top sustain and improve the industries as a going concern thereby enhancing their long-term profitability. Indeed one of the problems that are normally faced by manufacturing companies. Is how to maintain and value their inventories?

These companies lack the right valuation methods and best optimum level to maintain in stocks. To tackle this problem, effort should be made by the management to eliminate price instability and high expenditure on frequent re-order stocks.

Furthermore, since various stock valuation methods have different effects on the financial statement. The problem here is that many manufacturing companies have not been using the right stock valuation methods.

1.3 OBJECTIVE OF THE STUDY

Demerits as it concerns manufacturing companies. Reliably, manufacturing companies cannot exist without stocks. Therefore, it is good for every meaningful manufacturing company to take re cord of its stock. This is because a little deviation form the appropriate way of stock valuation and management will lead to material wastages, reduction in profit and loss of goodwill.

Specifically, the aims of these study are:

(i) To appraise the management of inventories in terms of merits and demerits as it concerns manufacturing companies and Nigeria Breweries in particular.

(ii) To ascertain the extent of application of stock valuation methods in manufacturing companies.

(iii) To Ascertain the effect of various stock valuation methods on the reliability of the financial statement.

(iv) To determine the effects of poor storage spaces, under or over-stocking and non-store record keeping.

It is also the objective of this study to make suggestions in a view to helping to solve the problem.

1.4 RELEVANT RESEARCH QUESTIONS

(i) How does the absence of the observation of economic order quantity (EOQ) in stock management contributed to the poor performance of manufacturing companies particularly Nigerian Breweries Plc?

(ii) What effects has the absence of the practice of periodic or perpetual stock taking on Nigeria Breweries?

(iii) What effects does poor space have towards the continued sustenance of Nigeria Breweries plc?

1.5 RESEARCH HYPOTHESES

This research will test the following:

(i) Different stock valuation methods have different effects on the reliability of financial statement.

(ii) Effective stock management has a relationship with profitability.

(iii) Adequate and efficient stock control enhance workflow in manufacturing companies

1.6 SIGNIFICANT OF THE STUDY

This study would mean a great deal to the users especially the users of financial statements, these statements, manufacturing companies and the reader. To the user of financial statements, this study will give in-depth knowledge on the best stock management and valuation. To the manufacturing companies, it will help them tackle their age-long stock management and valuation problem. To the targeted readers, it will serve as a stepping ground for subsequent research on this topic.

1.7 SCOPE AND LIMITATIONS OF THE STUDY

This study would focus on the appraisal of inventory management and valuations in manufacturing companies in Nigeria and Nigerian Breweries in particular. The scope of this study is limited by a number of factors. The presence of few manufacturing companies in Nigeria particularly in Enugu state brought about the choice the Nigerian Breweries Plc., 9th mile as a case study.

Further, the method of providing information for research purpose has not been adequately developed among corporate bodies as the research met difficulties in obtaining information from officials. The high cost transportation occasioned by the high cost of fuel also posed a problem.

1.8 DEFINITION OF TERMS

Raw materials are those basic inputs that are converted into finished products through work-in-progress. These are semi-manufactured products. They represent products that are needed more before they become finished products for sale or use.

⦁ Finished Goods

⦁ Finished goods are

Raw Material Stores (RMS)

The raw material store is the store where all raw materials used in brewing are kept. Such raw materials include maize, sorghum, hops, sugar, etc. also contained in the raw material store are some chemicals such as Ascorbic acid, Carmel vitamins etc. the store which handled by a storekeeper is headed by the planning assistant managing assistant manager.

REFERENCES

Akano, J. J. (1981), “Material Cost control” An article on Business Times of 27th April, 1981.

Pandy I. M (1991), Financial Management “The Need to Hold Inventories; 3rd Edition, Urkas publishing LTD new Delhi.

N.A.S.B (1986), “Stocks” Statement of Accounting Standard Nigerian Accounting Board Lagos.

Olojede G.O.D   (    ), “Stores Accounting A Seminar on and Associates Lagos.

.

APPRAISAL OF INVENTORY MANAGEMENT AND VALUATION IN THE COMPANY


CLICK HERE TO GET THE COMPLETE PROJECT »


TESTIMONIES FROM OUR CLIENTS


Please feel free to carefully review some written and captured responses from our satisfied clients.

  • "I love what you guys are doing, your material guided me well through my research. Thank you for helping me achieve academic success."

    Sampson, University of Nigeria, Nsukka.
  • "researchwap.com is God-sent! I got good grades in my seminar and project with the help of your service, thank you soooooo much."

    Cynthia, Akwa Ibom State University .
  • "Sorry, it was in my spam folder all along, I should have looked it up properly first. Please keep up the good work, your team is quite commited. Am grateful...I will certainly refer my friends too."

    Elizabeth, Obafemi Awolowo University
  • "Am happy the defense went well, thanks to your articles. I may not be able to express how grateful I am for all your assistance, but on my honour, I owe you guys a good number of referrals. Thank you once again."

    Ali Olanrewaju, Lagos State University.
  • "My Dear Researchwap, initially I never believed one can actually do honest business transactions with Nigerians online until i stumbled into your website. You have broken a new legacy of record as far as am concerned. Keep up the good work!"

    Willie Ekereobong, University of Port Harcourt.
  • "WOW, SO IT'S TRUE??!! I can't believe I got this quality work for just 3k...I thought it was scam ooo. I wouldn't mind if it goes for over 5k, its worth it. Thank you!"

    Theressa, Igbinedion University.
  • "I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much researchwap.com, infact, I owe my graduating well today to you guys...."

    Joseph, Abia state Polytechnic.
  • "My friend told me about ResearchWap website, I doubted her until I saw her receive her full project in less than 15 miniutes, I tried mine too and got it same, right now, am telling everyone in my school about researchwap.com, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work"

    Christiana, Landmark University .
  • "I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!."

    Musa, Federal University of Technology Minna
  • "I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!."

    Ali Obafemi, Ibrahim Badamasi Babangida University, Niger State.
  • To contribute to our success story, send us a feedback or please kindly call 2348037664978.
    Then your comment and contact will be published here also with your consent.

    Thank you for choosing researchwap.com.