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Evaluation Of Factors Affecting The Concept Of Profitable As A Guide To Policy Decision

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59 Pages
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The evaluation of factors influencing the concept of profitability as a guiding principle for policy decisions necessitates a comprehensive understanding of multifaceted dynamics. Key determinants such as market demand, competitive landscape, technological advancements, regulatory frameworks, and operational efficiency profoundly impact a company’s ability to generate profits sustainably. Additionally, factors like economic conditions, consumer preferences, and societal trends contribute significantly to the viability of profit-oriented strategies. Moreover, the integration of environmental, social, and governance (ESG) considerations is increasingly imperative in assessing long-term profitability and mitigating risks associated with reputational damage and regulatory non-compliance. Thus, a holistic evaluation accounting for both internal and external influences is essential for formulating effective policies that prioritize profitability while aligning with broader societal goals and ethical standards.

PROPOSAL

Management is the hud of any industry and must utilize all the resources at its alisp as to achieve the goals of their respective industries.
The objective of this project titled, “ Evaluation of factors affecting the concept of profitability as a guide to policy decision, is by the government and management on the concept of profitability. Both primary and secondary sources of data collection will be used.
The method of analysis that will be used in this study is the mean and standard deviation.
The limitations which will be encountered in the course of this study include: time factor, financial constraints, Refusal of the officers of the company to co-operate with the researchers etc.
As findings show that policy decision have a strong effect on profitability, it will therefore be recommended that government should come up with a policy that ill help industries receive both financial and moral support for at least its first five years of operation. The manufacturers Association of Nigeria (M.A.N) is advised to establish training centre where intending entrepreneurs will be trained in the act of entrepreneurship which will also enhance profitability.

TABLE OF CONTENT

Cover page
Title page
Approval page
Dedication
Acknowledgement
Proposal
Table of content

CHAPTER ONE
INTRODUCTION
1.1 Background of the study
1.2 Statement of the problem
1.3 Purpose of the study
1.4 Research question
1.5 Statement of hypothesis
1.6 Significance of the study
1.7 Scope and limitation of the study
1.8 Definition of terms

CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Cost
2.2 Uses of cost data
2.3 Methods of inventory control
2.4 Costing methods
2.5 Costing techniques

CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1 Area of the study
3.2 Population of the study
3.3 Sample and sampling determination
3.4 Instrument of data collection
3.5 Validation of the instrument
3.6 Reliability of the instrument
3.7 Administration of research instrument
3.8 Method of data analysis

CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS

CHAPTER FIVE
FINDINGS, CONCLUSION AND RECOMMENDATIONS.
5.1 Findings
5.2 Conclusion
5.3 Implications
5.4 Recommendations
Bibliography
Appendix

CHAPTER ONE

INTRODUCTION
1.1 BACK GROUND OF STUDY
According to Harper (1977) the concept of profitability can be defined as the concept which provides management with alternative course of action in accordance with the various degrees of profitability stating clearly in relevant cost account form individual projects which enables management to select the most profitable.
Most of the policy decision of manufacturing industries are generally directed towards profitability. Policy decisions made under this concept has a direct effect of increasing and enhancing the general profitability of the manufacturing industries concerned.
The origin of this concept can be traced back to the era of industrial revolution. Prior to this era, industrial were run as family concerns but with the industrial revolution, most business grew from the usual family arrangement to large groups. Resources were pulled together and handed over to other people to manage for the owner’s.
Naturally, resource owners must expect a profitable returns from the investments, this urgent obligations forced management to seek ways of carrying out their activities so as to make profitable returns to the resource owners. Investment grew in all dimension until the first and second world wars, one would have expected that after the world war industrialization would have been abandoned but as we have seen today, this was fortunately far from being so. Rather a large number of manufacturing industries grew in importance and also in complexity all in a bid to meet the demands and standard set by the developed countries.
Enough quantity of materials had to be bought and at the same time later which is a very vital commodity had to be allowed to operate in a conducive environment so as to enjoy the benefits of hiring labour prior to commencement or an expansion the manufacturing industry must move with the changing technology, meet it social responsibilities, operate under government stipulations, pay tax as and when due and meet the expectations of the shareholders.
High administrative cost, cost of changing technology, fierce competition, scarce resource, falling economy, cost of government restrictions, the need for maximization of shareholders wealth, poor capitalize etc must be accommodated and adjusted in such a way that total cost of manufacturing a product will not only be less than sales renew but give a good profit margin.
This stipulation of operating under many uncompromising variables gave rise to the need for policy decision on such things as siting an industry.
– Expansion of an existing industry
– Introduction of a new product
– A change in production design
– Sell or process further
– Close down.
– The nature of this research project requires theoretical approach and analysis which will cover the three dimensional focus of the research, the research focus on the three major areas are;
– The economical factor affecting the concept of profitability as a guide to a policy decision.
– The Endogenous factor affecting the concept
– The political factors.
These three combine to give a broader view of the factor affecting the concept of profitability as a guide to policy decision.
The theoretical orient action of what best provides the researcher the framework for analyzing the factors affecting the concept of profitability were.
1. Theory of location of industry which state that nearness to raw
Materials and available of labour affects the profitability of manufacturing industries. The location of extractive industries for instance depend on where raw materials are to be found. Also mining industries depend on geological, surveys. Agricultural industries depend on side condition and climate. Where the required raw materials are heavy and bulk the industry will be set up near source of raw materials in order to reduce cost.
2. Theory of nearness to market: Bulking or heavy goods are expensive to transport. Base on this, the theory therefore states that such goods be produced near the market.
3. Other general economic factors which includes industries requiring thermal heat need to be near local mines e.g. steel industries.
Tensa (1979) said that the endogenous theory which best suite the purpose of the research is the theory of operation management which is of the view that workers have the same objective with that of management which will ensure a responsible attitude towards organization decision making procedure.
4. On the political factors, the instability of government, restrictions on certain industrial activities were also theories which helped to find out factors effecting the concept of profitability
5. The theory of marginal costing were in dispensation tools for research.

1.2 STATEMENT OF THE PROBLEMS
This research work titled an evaluation of factors affecting the concept of policy decision is meant to solve among other things following problems
a) Effect of policy decision on the profitability concept in some selected industries.
b) Factors of production as a necessary condition for setting up an industry needs to be available.
c) How Government policies affect the concept of profitability.

1.3 PURPOSE OF THE STUDY
The purpose of this study includes the following
1. To ascertain the effect of policy decision on concept of profitability.
2. To find out the availability of factors of production
3. To determine the effect of ecology on concept of profitability
4. To determine how government policies affect the concept of profitability.

1.4 RESEARCH QUESTION
To guide this study the following question were formulated;
1. To what extent does policy decision have effect on concept of profitability?
2. To what extent the factors of production available in setting up industries?
3. How does ecological consider action affect.
4. To what extent does government policies affect the concept of profitability.

1.5 STATEMENT OF HYPOTHESIS
The following hypothesis have been formulated to guide the study;
HYPOTHESIS ONE
H0: There is no significant difference at profitability level 0.05 between the senior staff and junior staff men perception on effect of policy decision on concept of profitability.
H1: There is a significant difference at profitability level 0.05 between the senior staff and junior staff means perception on effect of policy decision on concept of profitability.
Hα: There is no significant difference at profitability level 0.05 between the senior staff and juniors staff mean perception on available of factors of production.
H1: There is significant difference at profitability level 0.05 between the senior staff and junior staff means perception on availability of factors of production.
HYPOTHESIS THREE
H0: There is no significant difference at profitability level 0.05 between the senior staff and junior staff means perception on the effect of government policies on profitable industries.
H1: There is a significant difference at profitability level 0.05 between the effects of government policies on profitable industries.

1.6 SIGNIFICANCE OF THE STUDY
The study of the factors effecting the concept of profitability as a guide to policy decision is unique to the extent that is focused at helping student of accounting and financial studies in terms of cost they affect co-operate profit. Also to benefit from this are those preparing feasibility study for terms of industries to be used.
This study will also help potential foreign investors to obtained both theoretical and practical information on the profit in establishing of production.
Finally, it will enable the research have a depth knowledge of this study and open new areas of further research for the students and industries researchers.

1.7 SCOPES AND LIMITATION OF THE STUDY
This study centres on factors that affect the concept affect the concept of profitability and how it guides policy decision. For easy analysis this study is limited to one industry in municipality. This industry is
The limitations encountered in the course of this study includes: firstly, refusal of offers of the company to co-operate as expected, secondly, Reluctance of the staff of the company to supply the needed information. There were also time factor and financial constraints such as high cost transport and textbooks.

1.8 DEFINITION OF TERMS
1. The manufacturers Association of Nigeria (M.A.N). This a body establishes to establish training centres where intending entrepreneurs will be trained in the act of entrepreneurship.
2. Economic order quantity (E.O.Q); it is an important aspect costing relevant to material control.
3. Profitability; this has to do with running a business profitably ie making a profitable investment.
4. Policy: This is a plan of action adopted by a government, business etc.
5. Decision; This is a conclusion reached or a judgment arrived at

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Evaluation Of Factors Affecting The Concept Of Profitable As A Guide To Policy Decision:

The evaluation of factors affecting the concept of profitability as a guide to policy decisions involves analyzing various elements that influence a business’s ability to generate profits. Profitability is a fundamental indicator of a company’s financial health and performance, and it plays a crucial role in shaping policy decisions. Here are the key steps and factors to consider when evaluating these influences:

  1. Financial Metrics and Ratios: Evaluate financial ratios such as gross profit margin, net profit margin, return on equity (ROE), and return on assets (ROA). These ratios provide insights into a company’s ability to generate profits relative to its revenue and assets.
  2. Industry and Market Dynamics: Analyze the industry in which the business operates. Different industries have varying levels of profitability due to factors like competition, demand, pricing power, and market trends. Understanding these dynamics helps in setting realistic profitability goals.
  3. Cost Structure: Break down the company’s cost structure to identify fixed and variable costs. Evaluate how efficiently the business manages its costs and whether there are opportunities to reduce expenses without compromising product or service quality.
  4. Revenue Streams: Examine the various sources of revenue for the business. Evaluate which products, services, or customer segments contribute the most to profits. Consider diversification strategies to mitigate risks associated with relying heavily on a single revenue source.
  5. Market Positioning and Competitive Advantage: Assess the business’s competitive advantage and market positioning. A strong competitive position can often lead to higher profitability as the company can command premium prices or capture a larger market share.
  6. Innovation and Research & Development (R&D): Investigate the company’s investments in innovation and R&D. New products, services, or technologies can lead to increased profitability by catering to evolving customer needs and staying ahead of competitors.
  7. Operating Efficiency: Evaluate how efficiently the company utilizes its resources. Operational inefficiencies can lead to higher costs and lower profits. Streamlining processes and optimizing resource allocation can positively impact profitability.
  8. Capital Structure and Financing Costs: Analyze the company’s capital structure, including debt and equity ratios. Higher interest payments on debt can impact profitability. Assess the cost of capital and optimize the financing mix to minimize financial expenses.
  9. Economic Conditions: Consider the broader economic environment in which the business operates. Economic downturns can lead to decreased consumer spending and affect profitability. Having contingency plans in place can help mitigate such risks.
  10. Regulatory and Legal Factors: Evaluate how regulatory changes and legal factors impact the business’s operations. Compliance costs and changes in regulations can affect costs and profitability.
  11. Customer Satisfaction and Loyalty: Happy and loyal customers tend to generate repeat business and referrals, which can boost profitability. Monitor customer satisfaction and address issues promptly to maintain a positive reputation.
  12. Trends and Technological Advances: Keep an eye on emerging trends and technological advances that could disrupt the industry or create new opportunities for profit generation.
  13. Long-Term Sustainability: Consider the long-term sustainability of the business model. Short-term profit optimization should align with the company’s broader strategic goals and ethical considerations.
  14. Risk Management: Evaluate the company’s risk management strategies. Identifying and mitigating risks, such as supply chain disruptions or cybersecurity threats, can protect profitability.
  15. Stakeholder Expectations: Understand the expectations of various stakeholders, including shareholders, employees, and communities. Balancing these expectations with profitability goals is essential for maintaining support and goodwill.

Incorporating these factors into policy decisions ensures a comprehensive evaluation of profitability drivers and helps in making informed choices that align with the company’s strategic direction. It’s important to note that profitability is just one aspect of overall business performance, and decisions should be made in a holistic manner, considering both short-term gains and long-term sustainability.