1.

6 SCOPE OF THE STUDY

This study is basically concern with the impact of credit management on the of the listed

manufacturing companies in Nigeria .

1. NESTLE NIGERIA PLC

2. COCA-COLA NIGRIA LTD.

3. MAY & BAKER NIGERIA PLC

4. CADBURY NIGERIA PLC

5. GUINNESS NIGERIA PLC

1.7 LIMITATIONS OF THE STUDY

This study is hindered by the following factors: Time, Finance and Materials. The time expected

to complete this study is too short. Also, the finance estimated to carry out the study is not

enough. Finally, the materials needed to carry out the study are limited. All this make it difficult

for the research to be carried out in-depth research on the study. Financial constraint- Insufficient

fund tends to impede the efficiency of the researcher in sourcing for the relevant materials,

literature or information and in the process of data collection (internet, questionnaire and

interview).

Time constraint- The researcher will simultaneously engage in this study with other academic

work. This consequently will cut down on the time devoted for the research work.

1.8 Definitation of Terms

For easy comprehension of this research work the writer intended to define the following terms:
1.9 CASE STUDY/HISTORICAL BACKGROUND

1. NESTLE: Nestlé is a Swiss multinational food and beverage company headquartered in

Vevey, Switzerland. It is the largest food company in the world by revenue and other key
metrics, such as market capitalization and global presence. The company was founded in 1867
by Henri Nestlé, a pharmacist who developed an innovative infant food formula to address high
infant mortality rates. This early product, "Farine Lactée," became a breakthrough in nutrition,
and helped establish the company’s global footprint.

Today, Nestlé operates in over 190 countries and offers a wide range of products in categories
including baby food, bottled water, cereals, chocolate, dairy, coffee, health science, and pet care.
Some of its most famous brands include Nescafé, KitKat, Nestea, Gerber, and Purina. Nestlé's
portfolio spans more than 2,000 brands, making it one of the most recognizable food and
beverage companies in the world.

In addition to its products, Nestlé is also known for its commitment to sustainability. The
company has made significant strides in reducing its environmental impact, including efforts to
tackle plastic waste, improve water conservation, and promote sustainable sourcing of
ingredients like cocoa, coffee, and palm oil. Nestlé has also made investments in improving
nutrition and health, aligning with global trends toward plant-based diets and healthier food
options.

Nestlé’s operations are diverse, spanning across food production, research and development, and
marketing. The company has maintained its industry leadership by continually innovating and
adapting to changing consumer demands, such as the increasing focus on health-conscious
products, convenience foods, and environmentally responsible packaging.

Despite its successes, Nestlé has faced criticism and controversy over the years, particularly
regarding its practices in emerging markets, its role in the global water industry, and its influence
on nutrition and health policies. However, it continues to be a dominant player in the global food
and beverage sector, with a vision of "unlocking the power of food to enhance quality of life for
everyone, today and for generations to come."

2. DANGOTE CEMENT PLC: Dangote Cement PLC, a subsidiary of the Dangote Group, is
the largest producer of cement in Africa and one of the leading cement manufacturers globally.
The company was founded by Aliko Dangote, a Nigerian businessman and industrialist, who saw
an opportunity to meet the rising demand for construction materials in Africa's rapidly
developing economies. Dangote Cement started operations in 1992 with a small cement
production plant in Nigeria. Over the years, it expanded both in capacity and geographical reach,
becoming a major player in the African cement industry.

In its early years, Dangote Cement faced challenges common to the African manufacturing
sector, such as limited infrastructure, regulatory hurdles, and a lack of technical expertise.
However, the company was able to overcome these obstacles through strategic investments,
leveraging the Dangote Group's vast business network, and focusing on vertical integration. By
owning limestone mines and integrating its supply chain, Dangote Cement was able to reduce
costs and increase profitability. The company also focused on modernizing its manufacturing
facilities with state-of-the-art technology, which helped it achieve higher production efficiency
and improved product quality.

By the mid-2000s, Dangote Cement had significantly expanded its operations, with plants in
various Nigerian states, and had begun to explore international markets. The company made a
notable move in 2007 by listing on the Nigerian Stock Exchange (NSE), which increased its
access to capital and allowed it to fund expansion initiatives. This period marked the beginning
of Dangote Cement's regional dominance in West Africa. In subsequent years, Dangote Cement
expanded its footprint across the African continent, establishing plants in countries like Ethiopia,
South Africa, Senegal, Tanzania, and Zambia. The company's strategy was not just about
increasing production capacity but also about ensuring local production facilities to reduce
reliance on imports and create jobs in host countries.

Today, Dangote Cement's commitment to quality, innovation, and sustainability has solidified its
position as a market leader. The company operates 11 cement plants across Africa and has a
combined production capacity of over 48 million metric tons annually. Through continuous
innovation and expansion, Dangote Cement has become a symbol of economic growth in Africa,
contributing to the continent's infrastructure development and job creation. The company
remains focused on improving operational efficiency, increasing market share, and making a
positive impact on the communities where it operates

3. May & Baker Nigeria PLC: is one of the leading pharmaceutical companies in Nigeria, with
a strong history of providing high-quality healthcare products to the Nigerian market and
beyond. Headquartered in Lagos, Nigeria, May & Baker Nigeria has built a reputation for its
innovation, quality, and commitment to improving public health. The company’s roots trace back
to the early 19th century when it was founded by two British pharmacists, John May and Robert
Baker, in London, United Kingdom. The pair established the company with the aim of
developing and manufacturing pharmaceutical products that could address pressing health issues.

May & Baker rapidly grew into a successful business in the United Kingdom, offering a wide
range of pharmaceuticals, including prescription medicines, vaccines, and over-the-counter
products. Their ability to combine expertise in pharmacy with cutting-edge manufacturing
technology helped establish them as a trusted name in the pharmaceutical industry. The
company's success and international reach led to its global expansion, and in 1944, May & Baker
Nigeria was established as a subsidiary in Lagos, marking the beginning of the company’s
operations in Africa. This was a significant milestone as the company recognized the need for
local manufacturing and distribution of essential medicines in the African continent.

Since its establishment in Nigeria, May & Baker has played a pivotal role in the development of
the country’s pharmaceutical industry. The company was among the first to manufacture
vaccines locally, helping to address public health challenges such as malaria, tuberculosis, and
polio. Through its strong manufacturing capabilities and research and development (R&D)
efforts, May & Baker has been able to produce a wide array of pharmaceuticals, including
antibiotics, vaccines, vitamins, and analgesics, that are critical to improving healthcare outcomes
in Nigeria and other African markets. Over the years, May & Baker Nigeria has become
synonymous with reliability and quality in the Nigerian pharmaceutical industry.

4. Cadbury Nigeria PLC: is a major player in the Nigerian food and beverage industry, known
for producing high-quality chocolates, beverages, and other confectionery products. Founded in
1844 by John Cadbury in Birmingham, UK, the company initially aimed to provide affordable,
high-quality chocolate to the masses while promoting social justice and fair treatment for its
employees. John Cadbury’s commitment to ethical business practices was reflected not only in
his products but also in the fair working conditions he established for his workforce, which set
the foundation for the company’s long-standing values.

Cadbury’s journey to success began in 1831 when John Cadbury developed drinking chocolate, a
groundbreaking product that quickly gained popularity. In 1847, he introduced the first Cadbury
chocolate bar, revolutionizing the chocolate industry. By 1861, the company had outgrown its
original premises and expanded to Bourneville, a purpose-built village in Birmingham designed
to provide a healthy and supportive living environment for its workers. This expansion marked a
significant step in both the company’s growth and its commitment to creating a strong
community for its employees.

As the business continued to expand, Richard Cadbury, John’s son, took over in 1861 and played
a pivotal role in furthering the company’s reach. Under Richard's leadership, Cadbury became
more innovative, introducing new products and expanding its market share both domestically
and internationally. His dedication to improving the quality of life for workers and his focus on
the expansion of Cadbury’s product line helped solidify the company as a major name in the
global confectionery industry.

5. Guinness Nigeria PLC: is a leading beverage company in Nigeria, renowned for producing
some of the country’s most iconic alcoholic and non-alcoholic drinks, including Guinness Stout,
Malta Guinness, and Harp Lager. Founded in 1759 by Arthur Guinness in Dublin, Ireland, the
Guinness brand has become synonymous with quality and innovation in the global beverage
industry. What began as a small brewery in the heart of Dublin has grown into one of the most
recognized brands worldwide, and its influence extends well beyond its Irish roots.

Guinness expanded internationally over the decades, and in 1950, Guinness Nigeria was
incorporated to serve the rapidly growing Nigerian market. Nigeria’s vibrant beer-drinking
culture and expanding consumer base presented a promising opportunity for the Guinness brand.
In 1960, Guinness Nigeria took its first major step in establishing a local presence by opening its
first brewery in Ikeja, Lagos. This move was pivotal, as it allowed the company to produce its
products locally, ensuring better distribution and more affordable pricing for Nigerian
consumers.

By 1963, just three years after the Ikeja brewery was inaugurated, Guinness Nigeria made
another major leap by being listed on the Nigerian Stock Exchange. This milestone helped
solidify its position as a significant player in Nigeria's corporate landscape, expanding the
company’s reach and fostering trust with local investors. The listing also marked a new phase of
growth, as the company began to tap into Nigeria’s developing economy, attracting local and
international investors interested in the success of the Guinness brand in the African market.

In 1997, Guinness Nigeria took another strategic step by merging with two other prominent local
brands, Harp and Malta Guinness. This merger allowed the company to diversify its product
portfolio, incorporating non-alcoholic drinks like Malta Guinness, a popular malt drink, and
Harp Lager, a refreshing beer alternative. The expanded portfolio helped the company cater to a
wider range of consumers, including those who preferred non-alcoholic beverages, thus boosting
its market share and solidifying its dominance in the Nigerian beverage sector.
1.4 Objectives of The Study

The main objectives of this study is to appraise the impact of credit management on the
profitability of the manufacturing firm and also to provide effective means of reducing default in
the collection of account. Other objective includes the following:

i. To evaluate the impact of effective account receivable period on return of asset of the
firm
ii. To examine how payment payable period influence the return of asset of the firm
iii. To analyze the effect of inventory turnover on the return of asset of the firm

1.5 Research Questions

The following research question as designed to attend the objective of this work:

Research Questions:

i. How does account receivable period impact on the return of asset

ii. In what way do payment payable
2.4 CONCEPTUAL MODEL OF THE STUDY

INDEPENDENCE VARIABLE DEPENDENCE VARIABLE

CREDIT MANAGEMENT FINANCIAL

PERFORMANCE

ACCOUNT RECEIVABLE
PERIOD RETURN

(ARP) ON

PAYMENT PAYABLE ASSET

PERIOD
(ROA)
(PPP)

INVENTORY
TURNOVER

(IT)