THE IMPACT OF CREDIT MANAGEMENT ON THE PROFITABILITY OF A MANUFACTURING FIRM

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ABSTRACT 

The aim of this research work is to appraise “The impact of credit management 

on the profitability of a manufacturing firm focused on Unilever Nigeria Plc Aba”. 

This is because; trade credit is a short term source of finance and sometimes 

take the form of bills payable. The statement problem of this research banks 

about the poor level of credit management and also the problems which the 

firms encounter as a result of high-rate of bad debts. The objective of this 

research study is to highlight the effects of the credit management on the 

profitability of the company as well as to highlight the advantages of effective 

and efficient management of trade credit amongst others. Furthermore, this 

research work will be of immense significance to the staff of Unilever Nig. Plc 

Aba as well as the students and the researcher since it aims at providing effective 

means of reducing default in collection of accounts. Also, research questions like; 

could a company’s liquidity problem be attributed to bad debt? On the average, 

how long do you allow credit to customers? Etc. research instrument used were 

questionnaires for the purpose of obtaining the desired result. In treating and 

analyzing the data collected, an extensive use of tabular information and 

percentages were of great importance. In the light of the findings and 

conclusions of this work, the following recommendations are put up: that then 

should be a regular review of credit policies to suit the changes in the business 

environment and that an enquiry unit should be established to take 

responsibility for prospective credit’s assessments amongst others.  

 

TABLE OF CONTENTS 

Title page = = = = = = = = = i 

Approval Page = = = = = = = = ii 

Dedication = = = = = = = = = iii 

Acknowledgement = = = = = = = iv 

Abstract = = = = = = = = = v 

Table of contents = = = = = = = = vi 

CHAPTER ONE  

1.0 Introduction = = = = = = = 1 

1.1 Background of the Study = = = = = = 1 

1.2 Statement of the Problem = = = = = 3 

1.3 Objective of the Study = = = = = = 5 

1.4 Formulation of Research Hypotheses = = = 6 

1.5 Research Questions = = = = = = 7 

1.6 Significance of the Study = = = = = = 8 

1.7 Scope of the Study = = = = = = = 9 

1.8 Limitations of the Study = = = = = = 9 

1.9 Definition of Terms = = = = = = 10 

CHAPTER TWO 

2.0 Literature Review  = = = = = = 12 

2.1 Reasons for granting credit = = = = = 14 


 

2.2 Setting credit policy and Regulation = = = = 17 

2.2.1 Credit Standards = = = = = = = 18 

2.2.2 Credit Terms = = = = = = = 18 

2.2.3 Collection Efforts = = = = = = = 19 

2.3 Credit Policy Goals = = = = = = 20 

2.3.1 Optimal Credit Policy = = = = = = 20 

2.4 Credit Policy Variable Analysis = = = = 22 

2.4.1 Credit Analysis = = = = = = = 23 

2.4.2 Credit Scoring = = = = = = = 24 

2.4.3 Collection Policy and Procedures = = = = 26 

2.4.4 Establishing Internal Collection Procedure = = = 26 

2.4.5 Other Collection Procedures = = = = = 27 

2.4.6 Monitoring Receivables = = = = = = 28 

 References = = = = = = = = 34 

CHAPTER THREE 

3.0 Research Methodology = = = = = = 35 

3.1 Research Design = = = = = = = 35 

3.2 Area of Study = = = = = = = 36 

3.3 Sources of Data = = = = = = = 36 

3.4 Population of the Study = = = = = = 37 


 

3.5 Instrument of Data Collection = = = = = 38 

3.6 Validation of the Instrument = = = = = 38 

3.7 Reliability of the Instrument = = = = = 39 

3.8 Method of Data Analysis    = = = = = = 39 

3.9 Sample Design and Determination of Sample Size  = = 40 

CHAPTER FOUR 

4.0 Presentation, Analysis and Interpretation of Data  = = 42 

4.1 Analysis and Interpretation of Data = = = = 42 

4.2 Test of Hypotheses = = = = = = 55 

4.3 Test of Hypothesis 1 = = = = = = 56 

CHAPTER FIVE 

5.0 Summary of Findings, Conclusion and Recommendations 68 

5.1 Summary of Findings = = = = = = 68 

5.2 Conclusion = = = = = = = = 69 

5.3 Recommendations = = = = = = 71 

 Bibliography = = = = = = = 73 

 Appendix 1 = = = = = = = = 75 

 Appendix II   = = = = = = = = 76


 

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APA

Ndudi, O. (2020). THE IMPACT OF CREDIT MANAGEMENT ON THE PROFITABILITY OF A MANUFACTURING FIRM. Afribary. Retrieved from https://afribary.com/works/the-impact-of-credit-management-on-the-profitability-of-a-manufacturing-firm

MLA 8th

Ndudi, Okwunna "THE IMPACT OF CREDIT MANAGEMENT ON THE PROFITABILITY OF A MANUFACTURING FIRM" Afribary. Afribary, 13 Jun. 2020, https://afribary.com/works/the-impact-of-credit-management-on-the-profitability-of-a-manufacturing-firm. Accessed 28 Mar. 2024.

MLA7

Ndudi, Okwunna . "THE IMPACT OF CREDIT MANAGEMENT ON THE PROFITABILITY OF A MANUFACTURING FIRM". Afribary, Afribary, 13 Jun. 2020. Web. 28 Mar. 2024. < https://afribary.com/works/the-impact-of-credit-management-on-the-profitability-of-a-manufacturing-firm >.

Chicago

Ndudi, Okwunna . "THE IMPACT OF CREDIT MANAGEMENT ON THE PROFITABILITY OF A MANUFACTURING FIRM" Afribary (2020). Accessed March 28, 2024. https://afribary.com/works/the-impact-of-credit-management-on-the-profitability-of-a-manufacturing-firm