CHAPTER ONE INTRODUCTION
BACKGROUND OF STUDY
The Nigerian Breweries Plc was incorporated first, as Nigerian Breweries Limited on 16th November, 1946 and later as Nigerian Breweries Limited on the commencement of operations in a second breweries at Aba in 1957. In accordance with the companies and allowed maters Act of 1990, the name was again changed to Nigerian Breweries Plc, since the formal incorporation in 1946, 51 years have rolled by, 51momentous years that saw the company grow from its modest beginnings into the ground company that it is today. The company now has five Breweries from which their highly refreshing high quality brands are distributed to all the nooks and corners of this great country.
The company has kept pace with key international development, thus ensuring that their systems, processes and operational procedures are always in conformity with proven best practices in most parts of the world. This has been evident in the vision and professionalism demonstrated in the way the business ha been managed in the past 51 years. The company now has a portfolio of eight high quality brands, star and Gulder lagers Maltina Amstel Malt drinks and legend extra stout, Schweppes Bitter Lemon, Schweppes Tonic Water and Schweppers Soda Water, all the above improvements in the company would not have been possible with out the company being solvent.
The old business adage “you have got to have money to make money” is simply a recognition that most companies needs funds in order to operate profitably. The need for funds in a manufacturing company which Nigerian Breweries Plc is no exception affected by everything that happens to the company. While the amounts needed in this company is inluenced by many factors and fluctuate over a period of time, this company have substantial investment in the current asset of stock, customers (debtors) and cash also in fixed assets such as building plants and equipment.
As a result of scare resources which is visible in almost all manufacturing companies, the assets disclosed on the balance sheet at any point in time are reflection of the cumulative investment decisions of management.
A weak liquidity position poses a threat to the solvency of the comparing and makes it unsafe and unsound. This company does not consider the use of the techniques for determining solvency very important and as such the only technique they use are as follows:-
(a) Total capital to total profit Assets and
(b) Dividends to profit after tax