CHAHTER ONE

INTRODUCTION

Microfinance institions like UC SA in Cameroon has as primary objective the collection of

deposit inorder to make profit.This research focuses on how MFI on intergrating cash
management inorder to be profitable.The study of cash management on the profitability of
MFI many factors were taken into consideration.The study here founds out that these MFI are
made up of males and females and that there is high profitability by customers and
profitability of employees in these institution . The study reveals that cash management has a
positive impact on the profitability which is in accordance with the alternative hyphothesis of
the study and the staffs made up of males and females performance profitability better than
the one made of just females as the the recommendations we thye financial institions should
adopt good cash management policies and techniques of cash.

1.1Background of the study

This section examines the background of the study for the historical,theoretical ,conceptual
and contextual point of view.

1.1.1 Historical background

The general overview of MFI. The concept of micro finance originated from the field of
informal finance in the years 1970 and 1980.Micro finance involves the provision of financial
services such as savings, loans and insurance to poor people living in both urban and rural
settings who are unable to obtain such services from banks (Basley 2002).Micro finance
according to Otero (1999.p.8) is the provision of financial service to low income poor and
very poor finance self-employed people. These financial services according to Ledger wood
(1999) generally include micro savings and micro credit, but can also provide other services
like micro insurance and money transfer or payment services. Micro finance institutions also
provide non-financial services like education, counseling, health, technical assistance training
and many others. They are nine approaches of providing micro credit or finance to
customers. These ones are; the minimalist approach, the integrated approach, the
institutional approach, welfarist approach, the commercial approach, the individual
approach, the group lending approach, the existing business approach and the creation
business approach(Messomo,2012).When micro finance institutions perform services like
micro credit, there is high probability of default. This at times greatly affects the probability
of microfinance institutions.

The concept of microfinance was pioneered in Bangladash by Muhammed Yunus in the year
1970s in the village of jobra. He experimented by lending to the poor women of the village
of Jobra. He also found the Grameen bank and won the noble price in 2006(Helms, 2005).
Since then, innovation in microfinance services has evolved. This evolution is aimed at
alleviating poverty. Poverty has been the talking point of most political agendas worldwide
especially less developed countries like Cameroon. According to International Monetary
Fund (IMF)(2003) country report on poverty reduction strategy papers(PRSPS), poverty rate
in Cameroon has about was 40.2% in 2001.According to Ayuk (2012), Cameroon has about
500 microfinance institutions of all categories actively participating in the alleviation of
poverty. If alleviation of poverty by MFIs through the granting of micro credit leads to
default at times, there is a need to identify this problem. The evolution of microfinance has
been the turning point in financing of both entrepreneurial ventures and small businesses.

In a number of European countries micro finance evolved from informal beginnings during
the 18th and 19th centuries as a type of banking of the poor, juxtapose to the commercial
and private banking sector. Almost from the unset microfinance iyhmeant financial
intermediation between micro savings and micro credit and was powered by intermediation.
In Germany, the former microfinance institution now accounts for about 50% of banking
assets; the outreach is to about 90% of the population. Microfinance in Asia has much longer
history, though little seems to known about the early history of hui in China, Chit funds in
India, the arisen in Indonesia or the paluwagan in the Philippines to name a few. Financial
institutions of indigenous origin, most of them informal are still exceedingly wide spread but
had been largely ignored in financial sector developments. However, there are exceptions on
a limited scale, as in India/ where chit funds are regulated like in Indonesia with its highly
diversified rural microfinance sector where various forms of informal financial institutions
have been registered and eventually regulated throughout the 20th century (Hans,
2005).There are 3categories of MFI which are ,

Category one microfinance institution are financial institutions that collect savings and
deposits and lends them out to their members this category includes; association,
cooperatives and credit union. There is no stipulated capital for category 1 institution
instead COBAC(BANKING COMMITION OF CENTRAL AFRICAN STATE) text required the capital
to be sufficient to cover and meet up with stipulated prudential norm. An example of
category 1 institution is TIKO BANANA PROJECT COOPERATIVE CREDIT UNION LIMITED
(TBPCCUL).

Category two microfinance institutions are financial institution that collect saving and
deposit and later on lend them out to their third parties. These category groups are limited
liability companies that function more like a micro bank. The minimum capital for such
category 2 institutions are stipulated by the text is 50millionFCFA prove of such must be
shown by the use of a bank statement from a commercial bank.

Category three microfinance institution are other microfinance institutions that give out
loans to everyone who ones it (the are no affiliated to CAMCUULL).This is made up of
lending institutions that do not collect savings and deposits they include the microcredit and
project financial institutions. The minimum capital required for such is over 25millionFCFA
for category 3.The amount must be fully paid and evident to show in the form of a bank
statement from only commercial banks as at the time of application for accreditation. This
microfinance institution has an objective which is divided under article 5 of the uniform act
include the following; Firstly, to finance small and medium size enterprises in order to boost
the economic growth of the nation. Secondly, to reduce poverty by granting loans to
households, this will go a long way to improve in the living standards of the citizens.

UNITED CREDIT SA is MFI of second category which accepts deposits and give out loans to
its customers created in the year 22/06/2013 and received its full agreement by the
COBACMINFI NUMBER 000000206 of 26/03/2020.It is declared a MFI of second category
with the capital of 385000000fcfa.ii It name of origin was YEMBA UNITED CREDIT and
replace to UNITED CREDIT. It counts four agency in Cameroon two at Douala ,one in Dshang
and the other in Yaounde.

1.1.2 Conceptual Background

Here terms related to the studies are going to be defined

CASH MANAGEMENT :In the banking institutions cash management refers to the day –to-day
administration of managing cash inflows and outflows. Because of multitude of cash
transactions on a daily basis they must be managed with the ultimate goal of maximizing
liquidity and minimizing the cost of funds.

PROFITABILITY:Profitability is a measure of an organization profit relative to its expenses.

Organizations that are more efficient will realize more profit as a percentage of its expenses than a
less- efficient organization ,which must spend more to generate the same profit .

BANK PROFITABILITY: Is the measure of banks performance .Banks make a profit by

earning or generating more money than what they are paying in expenses . The main part of
the profit of a bank comes from the services fees, charged for its services and the earned
interests from its assests.

MICRO FINANCE:Micro finance refers to the financial services provided to low income
individuals or groups who are typically excluded from traditional banking .Most micro
finance institions focus on offering credit in the form of small working capital
loans ,sometimes called microcredit.
MICRO FINANCE INSTITION :it’s a financial instition which provide credit sometimes
called mini banks however the size of the loan is smaller than that of the bank .These small
loans are known as microcredit .The clients of an MFI are often microentrepreneurs in need of
economic support to launch their business.

1.1.3 Theoretical Background

Here we will be seeing the different theories which explain cash management on profitabliy

1.1.3.1 Free Cash Flow TheoryFree Cash Flow Theory

The theory asserts that, management has the responsibility of holding cash to gain control
over it in making investment decisions (Huseyin, 1997) when cash is readily available
investment is made easier by the managers. The management must always ensure that it
invests in the activities which maximize the shareholders' returns. By holding sufficient
amount of cash, the management is guaranteed in the investment in growth projects due to
the availability of funds hence improved financial performance. Scarcity of funds means that
the management will not be able to invest in any investment aimed at improving the welfare
of the shareholders. Eljelly (2004) criticized the free cash flow theory by arguing that by
managers holding too much cash they can easily make poor investment.

1.1.3.2 Cash Conversion Cycle Theory

According to Gitman (1974) the larger the cash conversion cycle, the better the financial
performance. Cash conversion cycle is key in any business organization since the business
organizations are able to know the amount of cash needed. Cash conversion cycle theory
focuses majorly on the period of time the company takes to acquire the raw materials and
the cash inflows as a result of the sale of the goods. Every individual business entity needs to
analyze its cash conversion cycle this will enable them to make any improvements since it
will affect the financial performance. The shorter the cycle, it implies that business
organizations need few resources to operate. When the cash conversion cycle is short, it
implies that business organizations need few resources to operate. When the cash
conversion cycle is longer it implies that the sales growth is high which translates to higher
profits hence improved financial performance. Akinsulire (2003) criticized the cash
conversion cycle theory by arguing that the cash conversion cycle should be as short as
possible this will create more value for the shareholders.

1.1.3.3 Baumol Model Approach

According to Baumol (1952), Baumol model is a deterministic model of cash management which
determines the optimal cash balances by the business entities. The Baumol model is based on the
assumptions of certainty in the variables. The Baumolmodel approach is based on the argument that
choosing an optimal cash balances is like deciding the economic order quantity for inventory. The
Baumol model approach assumes two major costs which are opportunity cost and transaction costs.
Transaction costs are incurred when the business entity is in cash shortage it is forced to dispose the
marketable securities which are in the short term. This implies that the securities are converted from
the earning form to non-earning form. The transaction costs arise as a result of holding cash in hand
which brings about the opportunity cost which is equal to foregone interest income. The Baumol
model makes some assumption which include: The annual cash requirement is known and is
constant, the firm has a steady cash inflow requirement and the opportunity cost is based on the
interest rate on short term marketable, securities and is known and constant. According to the
model, The optimal cash balance held has a direct significant impact on the financial performance.

1.1.3.4 The Miller-Orr Model Approach

According to Miller and Orr (1961) business entities can determine an upper limit and return
point of cash balances which influences the financial performance. The Miller-Orr Model
approach majorly provides for cost efficient transactional balances and makes anbound that
implies that a business entity has excess cash which it can utilize to buy the marketable
securities so that the cash balance is brought back to the optimal bound. However, the cash
balances can hit the zero mark which force the management to return to it the optimal
bound. The management can accomplish this by selling and converting the securities into
cash. The Miller - Orr Model is based on the basic assumptions which include, there is no
specific underlying trend in the balances of cash over time and the optimal values of cash
balances depends on the opportunity costs and the degree of fluctuations in the market.
According to this model, the optimal bound the cash is the better the financial performance.

1.1.4 Contextual Background

The contextual background was the interest on the activities of UC SA on how the make to manage
their cash gotten from the savings of customers, from the interest paid from loans giving to
customers in order to be profitable.Thier activities such as accepting deposits, credit creation
payments of salary are their main source of profit.but some problems have been observe such as the
management of cash ,repayments of loans also the problem of value dates . there is also the problem
of payment meaning lack of liquidity which affects the cash management because of banks who are
sometimes not effective also the problem to recover debts .Also services rendered by UC SA are very
important for people and for profitability . also UC SA their demand for cash which help them to
manage how to give loans and pay customers when ever the need to redraw.people should also
know the importance of cash managent.

1.2 Statement Of The Problem

The key to survival of any micro finance institution is cash flow because, if cash does not flow in the
institution at any adequate rate to maintain a level of working capital, then the company will struggle
to survive as a result; the company might close down completely. Micro Finance Institutions have
been facing cash management problems. Many MFIs do not perform many cash management
policies and techniques simply because they feel the ones they adopt are ok. Cash management is
the lifeline of every business. The lack of cash management knowledge and skills prevent MFIs to
adequately manage their cash flow. Over the years, UC SA has been faced with the problem of not
managing cash and cash payment problem to their customers. For example, UC SA can give out
500,000 FCFA cash to their customers as loans and as a result the customer pays 300,000 FCFA
instead of 500,000 FCFA thereby leading to decrease of cash by 200,000 FCFA thereby leading to
delinquency meaning customer did not repay the entire cash amount. For UC SA, to be able to
recover all its loan amount UC SA need to put in place strategies or procedures by both the loan
officer and the board of directors to recover overdue loans amount granted to members. The gap
identified was that MFIs are not performing the basic cash management practices to foster their
profitability. This practice is omitted in business largely due to lack of knowledge and skills to perform
the task. Therefore the purpose of the study is to investigate the relationship between cash
management and profitability in UC SA and if they face challenges in implementing cash
management techniques.

1.3 Objective Of The Study

The study has the main objectives the specific objectives as listed below.

1.3.1Main Objective

The main objective of the study is to determine the effects of Cash Management on the Profitability
of Micro Finance case of UC SA.

1.3.2 Specific Objective

The study is guided by the following specific objectives:

.To examine the effects of Cash management on the financial profitability of MFIs case of UC SA.

.To determine the effects of Cash management on the financial profitability of MFIs case of UC SA.

1.4 Research Question

To meet the above objectives ,they study the study will seek to answer the following questions

1.4.1 Main Research Question

The study therefore seeks to provide answers to the following questions; What are the effects of
Cash management on the profitability of MFIs ?

1.4.2 Specific Research Question

In Line with the study of William Baumol (2003), stated that cash should be managed and
reflect the cost of volume relationship as well as the cash flows, this study specifically
answers the following research questions;
1) What are the effects of cash management on the financial profitability of MFIs in Cameroon?

2) What are the effects of Cash management on the economic profitability of MFIs in Cameroon?

1.5 Research Hyphotheses

In other to meet the aforementioned objectives, the hypothesis of these studies is;

H1 Cash management affects the financial profitability of microfinance institutions

H2 Cash management affects the Economic profitability of microfinance institutions in Cameroon

1.6 Significance Of The Study

The study aims at finding out whether cash management has a role to play in the profitability of UC
SA .It will also enable the management to know the various factors that affect cash management in
the institution.To the Researchers, study may act as a source of literature for the scholars who intend
to do research on how cash management plays a role in the profitability of any financial institutions
or bank or any aspect to cash management. From the theoretical view point, the study provides a
comprehensive framework of looking at the changes occurring in credit management and
profitability. Even organizations from other sectors may greatly benefit from the research results
since the findings will help firms in all sectors reorganize the cash management policies and critically
review their operations so as to come up with better processes of dealing with credit systems.

1.7 Delimitation Of The study

Here we will be looking at the geographical scope of the study , the time scope and the thematic
scope .

1.7.1 Thematic scope

This research is concerned with the role of cash management on the profitability of MFIs .we shall
look their different approach on Cash management.

1.7.2 Geographical scope

UNITED CREDIT SA is situated at the chamber of agriculture in Yaounde marche central 100 metres
from bricolux.

.7.3 Time Scope

The study was 1carried between the period of 17January till 17 March. The time period was
too short in order to carry out and effective research.

1.8 Organization Of The Study

The work is made up of 5 chapters :
-Chapter one is made up of the background of the study, historical background, theoretical
background, conceptual, contextual background, statement problem, objectives of the study, research
questions, significance of the study, justification of the study, scope of the study.

-Chapter two of this work is the literature background, statement problem which gives reasons
of the research topic, research questions, objectives, hypothesis of the study and its
significance review which consists of the theoretical, conceptual review, empirical review.

-Chapter three is the research design, the population sample size and sample technique, data
collection method, methods of data analysis.

-Chapter four is the presentation analysis and the presentation results.

-Chapter five gives discussion, conclusion and recommendations.

CHAPTER TWO

LITTERATURE REVIEW

This chapter explores concept on cash management in order to give different theories on the
cash management and the different point of views .It highligths the different theories guiding
this work and also the empirical literature review is presented in these chapter. The research
gap for this chapter will also be presented in this chapter . In the end , the conceptual frame
work of this work will be presented .

This chapter gives the conceptual definition and the theories guiding the work .In this area
various scholars have proposed theories in order to attempt to explain the concepts and the
various variable of the work . Also ,similar research reviews have been done serving as
empirical studies . It is therefore important that the various theories should be review .
Althought most of the work has been written in different ccontexts .their contribution to the
success of this study is greatly relevant .The chapter broadly looked at two major
sections .The first section being the theoretical section its primary concern is explaining the
various theories explaining the management of cash and its profitability . The second section
concentrate on empirical works which have been conducted .

Litterature review involves identifying systhematically ,the location and analysis of the
document containing information relating to the problem of the study.
2.1 Theoritical Litterature Review

2.1.1 William Baumol Model EOQ

William Baumol (2003) suggested that cash may be managed in the same way as any other
inventory and that the inventory model could reasonably reflect the cost of volume
relationship as well as the cash flows. In this way, the economic order quantity (EOQ) model
of inventory management could be applied to cash management. It provides a useful
conceptual foundation for the cash management problem. In this model, the carrying cost of
holding cash namely the interest forgone on marketable security are balance against the fixed
cost of transferring marketable securities to cash or vice versa. According to this model,
optimal cash level is that level of cash where the carrying cost and transaction cost are the
minimum. The carrying cost refers to the cost holding cash that is interest forgone on
marketable securities. The transaction cost refers to the cost involved in getting the
marketable securities converted into cash and vice versa.

Assumptions
There are certain assumptions that are critical with respect to the Baumol model of cash
management. The particular company should be able to change the securities they own into
cash, keeping the cost of the transaction the same. Under normal circumstances, all such deals
have variable cost and fixed cost. The company is capable of predicting its cash necessities.
The company should also get a fixed amount of money. They should be getting this money at
regular interval. The company is aware of the opportunity cost required of holding cash. The
company should be making its cash payments at a consistent rate over a certain period of
time.

But other scholars like Gacia, Temel and Martinez-Solano (2008) came to criticize the
Baumol model by saying that:

*It does not allow cash flow to fluctuate

*Overdraft is not considered.

*There are uncertainties in the palter of future cash flows.

The theory of William Baumol was adopted in these research because, it has help the
researcher to see that cash management problem involves two cost that is, transaction cost and
opportunity cost leading to interest forgone on marketable securities. For this reason, the
study under investigation can also draws deductive analysis on how the role of cash
management can influence the profitability of MFI.
2.1.2 Cash Conversion Cycle Theory
According to Gitman (1974) the larger the cash conversion cycle, the better the financial
performance. Cash conversion cycle is key in any business organization since the business
organizations are able to know the amount of cash needed. Cash conversion cycle theory focuses
majorly on the period of time the company takes to acquire the raw materials and the cash inflows as
a result of the sale of the goods. Every individual business entity needs to analyze its cash conversion
cycle this will enable them to make any improvements since it will affect the financial performance.

The shorter the cycle, it implies that business organizations need few resources to operate. When the
cash conversion cycle is short, it implies that business organizations need few resources to operate.
When the cash conversion cycle is longer it implies that the sales growth is high which translates to
higher profits hence improved financial performance. Akinsulire (2003) criticized the cash conversion
cycle theory by arguing that the cash conversion cycle should be as short as possible this will create
more value for the shareholders.

2.1.3 The Miller-Orr Model Approach

According to Miller and Orr (1961) business entities can determine an upper limit and return point of
cash balances which influences the financial performance. The Miller-Orr Model approach majorly
provides for cost efficient transactional balances and makes anbound that implies that a business entity
has excess cash which it can utilize to buy the marketable securities so that the cash balance is brought
back to the optimal bound. However, the cash balances can hit the zero mark which force the
management to return to it the optimal bound. The management can accomplish this by selling and
converting the securities into cash. The Miller - Orr Model is based on the basic assumptions which
include, there is no specific underlying trend in the balances of cash over time and the optimal values
of cash balances depends on the opportunity costs and the degree of fluctuations in the market.
According to this model, the optimal bound the cash is the better the financial performance.

2.2 Conceptual Literature Review

The conceptual framework presents the key factors and the presumed relationships among the
variables of the study which are cash management and profitability.

Cash Management
Cash management is a set of strategies or techniques a company uses to collect, tract and
invest money. Although this definition of case refers only to paper or coin money, in cash
management companies also work with equivalents such as checks. This becomes
increasingly common as the money system becomes more abstract using electronic methods.

Hutchison (2007) defines Cash management as the process which involves the collection and
management of Cash to ensure optimal cash balances by the business entities. The
management of Cash focuses at ensuring adequate cash is maintained by the business entities
and any surplus is out into the correct use. Business entities have the duty to ensuring that the
entities over apply the overdraft facility, they can make high returns but still struggle with
maintaining adequate cash flows due to the following; making losses, seasonal business, delay
from the length of credit given to customers and avoidable delays caused by poor
administration such as failure to notify the involving department that goods have been
dispatched for them to invoice or cheques from debtors being made out incorrectly because
invoices do not contain clear information.

In conclusion, cash management refers to process of managing cash, collecting cash and
keeping it either for transactionary, precautionary and speculative motives or to invest it in a
business which in return yields profit.

Importance of holding cash

Transactionary Motives: It recognizes that the organization has to carry out daily transactions
in other to protect its profitable position. Cash is needed to pay labor, materials and utilities in
other to ensure smooth operation.

Speculative motive: Here, the organization maintains cash balance in order to take advantage
of any profitable venture that may unexpectedly crop up like sudden fall in price. According
to Kakuru, Harrison (2005) he said that the transactions mature is the need to hold cash to
facilitate day to day transactions of a firm.

Credit policy: The credit policy of a firm provides a framework to determine; Whether or not
to extend credit to a customer and the volume or amount of credit that can be extended.

the credit policy of a firm will be decided based on the credit worthiness of its customers,
market conditions, numbers of competitors, volume of sales, fund availability etc. setting up
credit policy involve two broth dimensions. They are CREDIT STANDARD and CREDIT
ANALYSIS.

Credit Standard: Credit standard are basic criteria or the minimum requirement of extending
credit to a customer. The trade-off with references to credit standard covers;

Collection cost: The effect of relaxed or non-restrictive credit standard would be more credit
and more sales, large credit department to maintain account receivable and increase the
collection cost. The effect of restrictive credit standards will be the reverse, the cost which is
liable to be semi-variable

Bad debts expenses: A non-restrictive credit standard has more chances of incurring higher
bad debts expenses than a restrictive credit standard.

Credit Analysis: Credit analysis involves obtaining credit information and evaluating credit
applicants. The sources of obtaining credit information are;

*Records of firms, history etc.)

*External sources

*Financial statements of customers

*References from trades and businesses

 *Report from the credit bureau

Evaluation of the quantitative and qualitative aspects, before granting of credit

Quantitative aspects
The assessment of the quantitative aspect is based on factual information from the financial
statements, the past record of the firm etc. preparation of aging schedule. Ratio analysis from
financial statements and trend analysis will review the financial strength of the customer.

Qualitative aspects
References from other suppliers, banks reference and special bureau would give an idea about
the credit worthiness of the customer.

In the Ultimate analysis, the decision whether to extend credit to the applicant and the amount
to extend will depend on both the quantitative and qualitative aspects.

Choosing the channels for investment: After estimating the surplus cash available, the next
step is to invest surplus cash in profitable investment. There are various factors to be
considered before choosing an investment channel they include;

Liquidity of investment
Cash being a current asset is highly required for maintaining liquidity. So any investment of
liquid asset should be investments that are liquid. Examples are marketable securities and
short term investment. This is because cash need to be drawn to meet all unforeseen
contingencies and emergency

Safety and security

Any investment choosing must be safe and secure enough to recover the minimum principal
invested so highly risky securities should be avoided to ensure security.

Return
The investment is being made to earn a return out of it, so various investment should be
considered in a portfolio after comparing the returns on one yield, any return associated with
the level of risk, the investment must be choosing base on optimal risk and return

Maturity period.
Cash being a current asset does not remain surplus for a long period of time, so different
investment options with varying maturities should be considered. In feature could be
considered
Technique to manage cash and keep liquidity
They are the techniques which can be used by the institution to manage cash. Account
receivable; money customers owe you plays a big role in your monthly cash flow so that it is
important to developed solid technique for tracking who owes the bank, how much they owe
and when payment is due. Make sure your account receivable staff is taking a proactive
approach to collecting on those unpaid bills. The number of mathematical model has been
developed to assist the financial management in distributing a company funds so that they
provide a mixture return to the company.

Purpose of cash management

In general, small businesses do not always have that ability to obtain the credit they might
need to have to rely on their own money to meet expenses. Even in large businesses, cost
might come up that are not expected. Being unable to handle these situations put the company
at risk for loss of revenue or in the worst case scenario going out of business.

Cash management and forecasting

Cash forecasting and budgeting is very important because it enables the firm to maintain short
liquidity. After preparing cash budget, if the is excess available cash, it can be invested
productively in short term marketable securities or short term investment. This enables the
firm to earn an interest income out of the excess cash which otherwise would have remained
as idle cash.

Cash management control

Cash forecasting and budgeting is very important because it enables the firm to maintain short
liquidity. After preparing cash budget, if the is excess available cash, it can be invested
productively in short term marketable securities or short term investment. This enables the
firm to earn an interest income out of the excess cash which otherwise would have remained
as idle cash.

Cash management control

The finance manager assumes the responsibility of maintaining effective control of cash, it
receipt and disbursement. He has to plan in such a way that the company maintains short term
liquidity to meet its regular obligation. At the same time, he has to plan effectively in
investing the surplus cash management technique which will be of great help. These
techniques are as follows;

Speedy cash collection

In managing cash efficiently, the cash inflow process can be accelerated through systemic
planning and refine techniques. Two main approaches would be to encourage customers to
pay quickly as possible and to convert the payment made by the customers into cash as early
as possible.

Prompt payment
This can be done by offering them cash discount for early payment. Most of this customers
may get attracted to do this account offer, the opportunity cost of not taking the discount
would work more than the benefit of holding the funds with them.

Surplus cash investment

Surplus cash investment refers to the excess cash available in an organization or firm above
the normal cash requirement. Any idle cash earn no further interest and therefore no
productivity. So it has to be invested in interest bearing securities. To successfully complete
this task, the cash manager has to first of all calculate the optimum level of cash required to
carry out normal operations. Thus, any surplus cash available will be known. After that, he
has to choose from the various channels of investment that gives the best benefits.

Profitability
Profitability refers to the potential of a venture to be financially successful, this may be
assessed before entering or it may be used to analyze a venture that is currently operating.
Although it may be found that one set of factors is not likely to be successful or has not been
successful, it may not be necessary to abandon the venture. It may instead be feasible to
change operational factors such as pricing or cost. The three basic situations that can describe
a business financial situation are if it can be profitable, it can break even or it can operate at a
loss. In most cases, the organization goal is to make profit.

When there is constant or abundant cash flow, it can be difficult to determine profitability. It
is easy for a person to make a mistake of linking numerous incoming and outgoing
transactions. Spending and receiving money, however those not mean a business is in a
healthy financial state.

Gazel and Lambert (2006) defined profitability as the capacity of an enterprise to generate
profit

In conclusion, profitability refers to the ability to produce a return that is, profit on an
investment based on its resources. The key aspect of profitability are; revenue and expenses.
Revenue are the business income. Resources like cash are used to pay for expenses like
payroll, rent and utilities. It is calculated as

Profit
Profitability =
Revenue
 PAT
Net Profit Margin = × 100%
Revenue

( PAT + Interest +Taxes+ Depreciation∧ Amortization)

EBITDA = × 100%
Revenue
This presents some internal and external factors that can affect the profitability of an institution

Return on ROA Asset (): This is a ratio calculated by dividing the net income over total
assets. ROA have been used in most of the studies for the measurement of the profitability of
financial institutions. ROA measures the profit earned per assets and reflect how well the
institution management uses their real investment resources to generate profit Nacceur (2005).

Return on Equity (ROE): It measures the rate of return on the ownership interest
(shareholders equity) of the common stock owners. It measures a firm’s efficiency at
generating profits from every unit of shareholders equity (also known as net or assets minus
liabilities). ROE shows how well a company uses investment funds to generate earnings
growth. ROE between 15% and 20% are considered desirable. ROE is the ratio of net income
to total equity (Fraker, 2006).

Return on Capital Employed (ROCE): Compares earnings with capital invested in the
company. It is similar to Return on Asset ROA), but takes into account sources of financing.
ROCE is the ratio of non-markup income to capital employed Fogelberg and Griffith, (2000).

Capital: Is taken as the ratio of equity capital to total assets. It’s interesting to note that higher
the capital level breeds higher profitability level since by having more capital, an institution
can easily adhere to regulatory capital standards so that excess capital can be provided as
loans Berger (1995).

Loan: Is the main source of income and is expected to have a positive Impact on an
institutions performance. Other things constant, the more deposits are transformed into loans,
the higher the interest loan-to-asset ratio, then profits may decrease. In addition, as loans are
the principal source of income, we expect that non-interest bearing assets impact negatively
on profits. We also expect that the higher equity to asset ratio, the lower the need to external
funding and therefore higher profitability. It is also a sign that well capitalized institutions
face lower cost of going bankrupt and then cost of funding is reduced.

Deposit: Deposits are the ratio of total deposits to total assets which is another liquidity
indicator but is considered as a liability. Deposits are the main source of funding to
institutions and hence it has an impact on the profitability of an institution.

Importance of profitability
Profitability has the following importance in firms and an economy as a whole;

Efficiency: By making profit, it encourages firms to cut cost and increase efficiency.

Fund investment: High profit gives firms the capacity to invest in research and development.
Corporate tax: Government tax corporate profit to gain revenue

Wages: High profit enables a rise in wages for workers

Incentives: High profit encourages resources to flow to profitable areas

Financial profitability
Financial profitability is the ability of a company to use its resources to generate revenues in
excess of its expenses. In other words, this is a company’s capacity of generating from its
operations. If a company is not operating, it will not make any money. Financial profitability
is revenue minus cost (Revenue-Cost). Typically, the profit of a company is calculated which
is a legal unit separate from its owners (shareholders) or employers and executive. Where
does the profit calculated according to all accounting rules, actually go and who takes it?
Sometimes for instance, employees of a profitable company feel that they should get better
salaries to the point where the profit becomes zero. They seldom will participate when the
company makes losses, though on the other hand, some shareholders feel that all the profit
belongs to them and require that the whole profit should be giving to them as dividends.
Actually, they can do so but it is not always a wise thing to do because if they have profit in
the value of their shareholdings goes up too. Sometimes, the company needs to keep the profit
for financing the company itself. If the company grows fast, it needs financing for all the
front-end costs and investments the growth requires. In fact, fast growing companies seldom
are very profitable because of the front-end cost, so keeping their profits is hot anybody’s
problem.

In conclusion, when looking at the profitability of an interesting company, rest assured them
and their auditors most of the time gets their members correctly calculate. It is more
interesting to assess whether the profit is adequate for the situation the company faces,
whether the cash flow is sufficient for the growth plans, how strong the balance sheet is and
what is the dividend policy along with the valuation of the shares. Return of Equity (ROE)
will be used to measure the financial profitability of a company given that it measures the
firms efficiency at generating profits from every unit of shareholders equity as a result, the
profitability will increase.

Economic profitability
An economic profit or loss is the difference between the revenue received from the sale of an
output and the cost of all input used and any opportunity forgone that is, given up in order to
pursue another one. In calculating economic profit, opportunity costs and explicit costs are
deducted from one course of action over another had they chosen differently. Economic profit
is often analyzed in conjunction with accounting profit. Accounting profit is the profit a
company shows on its income statement. Accounting profit measures actual inflows versus
outflow and is part of required financial transparency. Economic profit on the other hand, is
not recorded on a company’s financial statements nor is it required to be disclosed to
regulators, investors or financial institutions. Economic profit is a type of ‘’what if’’ analysis.
Companies and individuals may choose to consider economic profit when they are faced with
choices involving production levels or other business alternatives. The economic profit is used
by economist to measure the financial position of the company. Along with that, it helps in
forecasting the future performance. It works as a yardstick in judging the efficiency and
effectiveness of the company’s profitability. Economic profit is the profitability measurement
that calculates the amount that revenues received from selling a product exceeds opportunity
costs incurred from using resources to make and sell these products. In other words, it is the
excess money a company earned from one course of action over another had they chosen
differently.

While economic profit is an excellent way to measure a company’s profitability. This is

because it does not necessarily include all important financial aspects and transactions that
may occur during a giving time frame. Economic profit is measure based on the residual
income technique that serves an indicator of the profitability of projects undertaken such as
loan granting so as to get cash and be profitable. Its underlying promise consists of the idea
that real profitability occurs when additional wealth is created for shareholders and that
project should create positive returns above their capital been invested as a result, the level of
profits will increase given that there is enough cash in that institution.

Measures of Profitability
Profitability is a key metric in business as companies needs to know how much they make
from their activities. A few measures used by the businesses include the income statement,
gross margin ratio and returns on investment analysis. Each method is proper for measuring
financial returns, although the company can only use one of its desires. Profitability is both
and internal metric and a benchmark. High profits often indicate a strong ability to reinvest
earnings and compete heavily for market share in the business environment.

The income statement represents all sales revenue, cost of goods sold, and expenses for a
stated time period. The statement is part of standard accounting procedures and is usually a
monthly report. There are two measures of profitability with both being important. The first is
gross profit, which sales revenue cost of goods sold, and represents the amount of money left
after paying.

For the cost related to inventory sold. Gross profit less expenses results in net income, which
the money left for reinvesting into the business.

Gross profit ratios are a similar profitable measure in comparison to the first metric from the
income statement. The formula is slightly different. Here, sales revenue less cost of goods
sold is divided by sales revenue. This metric work is best for determining the profitability on
individual products or product line as well as the overall profit ratio. It indicates what percent
of every dollar goes to pay for inventory costs. Companies can use this measure to compare
itself against other businesses in the industry.

Return of investment is a measure that reviews the profitability for various projects in which a
company engages. The classic formula here is an investment gain less investment cost divided
by investment cost. Companies can typically use this as a pre-project profitability
measurement as they look to find the most profitable projects among several options. In most
cases, companies’ desire selection of the most profitable projects as these will add to the
bottom line and not create a drag on company resources. Other profit measures are necessary
to compare profit after the project is up and running.

Relationship between Cash Management and Profitability

This refers to how the proper management of cash brings about profitability in an
organization. The concern of business owners and managers all over the world is to devise a
strategy of managing their day-to-day operations in order to meet their operations in order to
meet their obligation as they fall due and increase profitability. Cash management is essential
to every business that designs to meet up with its financial obligations. No business operate in
isolative of cash management (Olowe 1998) said that cash is regarded as the most important
current asset for operations of business. There is a direct relationship that exists between cash
management and profitability. Every business wants to be profitable at the same keep enough
cash. Efficient cash management means that there is enough liquidity in that MFIs therefore it
will be profitable while lack of profit means there is no cash which might leads to the collapse
of that institution thus, it will not be profitable. Cash plays a significant role in the survival of
the firm’s and the smooth functioning of the business. A firm should ensure that it does not
suffer from lack-of or excess cash to meet up its short term obligations and also to ensure to
be profitable in order not to suffer losses.

This refers to how the proper management of cash brings about profitability in an
organization. The concern of business owners and managers all over the world is to devise a
strategy of managing their day-to-day operations in order to meet their operations in order to
meet their obligation as they fall due and increase profitability. Cash management is essential
to every business that designs to meet up with its financial obligations. No business operate in
isolative of cash management (Olowe 1998) said that cash is regarded as the most important
current asset for operations of business. There is a direct relationship that exists between cash
management and profitability. Every business wants to be profitable at the same keep enough
cash. Efficient cash management means that there is enough liquidity in that MFIs therefore it
will be profitable while lack of profit means there is no cash which might leads to the collapse
of that institution thus, it will not be profitable. Cash plays a significant role in the survival of
the firm’s and the smooth functioning of the business. A firm should ensure that it does not
suffer from lack-of or excess cash to meet up its short term obligations and also to ensure to
be profitable in order not to suffer losses.

2.3 EMPIRIVAL LITERATURE REVIEW

Under this section, I will present related findings to my topic

Various empirical studies review has presented varied conclusions. Early empirical literature
which aimed to establish the role of cash management on microfinance profitability.
However, other empirical works revealed that cash management was insignificant to
microfinance profitability

Various empirical studies review has presented varied conclusions. Early empirical literature
which aimed to establish the role of cash management on microfinance profitability.
However, other empirical works revealed that cash management was insignificant to
microfinance profitability

Various empirical studies review has presented varied conclusions. Early empirical literature
which aimed to establish the role of cash management on microfinance profitability.
However, other empirical works revealed that cash management was insignificant to
microfinance profitability

Ebben and Johnson (2011) conducted a study on the relationship between cash conversion
circle and level of liquidity, invested capital and performance in small firms over time of
firms in the United States between 2010 to 2011. The objective of this study was to found out
that cash conversion cycle is insignificantly related. The population of the study was eight
hundred and thirty three (833) United States firms. In the analysis, the cash conversion and
simple regression model was employed. After the research was conducted from the findings,
he established that firms with more efficient cash conversion circle was more liquid, required
less debts and equity financing and had higher returns. The result also indicated that small
firm’s owners maybe reactive in managing cash converted cycle. The implication is that good
cash conversion management practices enhance accountability hence improved financial
profitability.

Bhutto, Abbas, Rehman and Shah (2013) conducted an investigation on the relationship
between cash conversion cycle with firm size, working capital approach and firms probability
in Pakistan from the period 2012 to 2014. The Research objective of the study was to reveal
that the length of cash conversion cycle has a negative relationship with sales receivables on
Equity, Return on Equity (ROE) and financial poies of firms. The population of the study was
collected from financial statements of 157 non-financial companies comprising of 12
industrial groups listed on the Karachi stock exchange, Pakistan for the year 2009. In the
analysis, the Pearson Correlation and analysis of variance (ANOVA). He concluded that, cash
conversion cycle has a negative relationship with sales revenue on cash management on firms
in Pakistan. The implication of this is that, it is an eye opener to the present study in that he
has look on the cash management techniques thereby affecting financial performance.

Richard, Kofi Akoto et al in their study working capital management and profitability.
Evidence from Ghanaian listed manufacturing firms 2013, examined the relationship s
between working capital management practices and profitability of listed firms in Ghana.
They used secondary data collected from all the 13 manufacturing firms in Ghana covering
the period 2005 to 2009. The study finds a significantly negative relationship between
profitability and account receivable days. However, the firm’s cash conversion cycle, current
asset ratio, size and current asset turn over significantly positively influenced profitability.
The recommended that managers can create value for the shareholders by creating incentives
to reduce their account receivables to 30 days. It is further recommended that enactment of
local lost that protects indigenous firms and restrict the activities of importers are eminent to
promote increase demand for locally manufactured goods both in the short and long run in
Ghana. This study really gives an insight into present study in that it has shown some of the
reasons while working capital management can influence the profitability of a firm

Andy and Johnson (2010) conducted a study to assess the effect of Cash Management on the
financial performance of the firm's in the United States of America. The firms were selected
from different sectors in the economy which included agriculture, insurance and construction
securities. The population of the study was 789 firms but a sample of 326 firms’ was selected
for the study and they employed the linear regtmodel of the study. The study involved the
determinants of Cash conversion cycle and the return on asset which were the measures of
Cash Management and financial performance. They included that, cash management had
insignificant effect on the financial performance of the firm's in the United States of America.
From the above study, I can now deduce that, cash management had insignificant effect on the
financial performance of firms can have a relatively significant relationship on firms. As such,
this study has helped me (the researcher) to figure out the relationship this study has in mine.

Mutegi (2012) conducted a research to establish a research on the effect of budgetary controls
on the financial performance of construction firms in Kenya from the period 2008 to 2010.
The objective of the study was to analyze various budgetary controls on improving the
financial performance. The population of the study was 47 construction firms. However, a
sample of 26 construction firms was selected. In the analysis, the linear regression model was
employed and the research uses the secondary data in the analysis. He concluded that
budgetary control had a significant effect on the financial performance of construction firms
in Kenya. The implication of this study is that it is an eye opener to the present study in that
he has look on the budgetary control on financial performance as an indicator of firms.

Eljely, Peter (2012) conducted a research to establish a research on the relationship between
profitability and liquidity on the financial profitability of joint stock companies in Saudi
Arabia from the period 2011 to 2012. The objective of the study was analyzing the
relationship between the firm's liquidity levels as measured by current ratio. The population of
the sample was 37 joint stock firms. However a sample of 20 was selected. In the analysis, the
correlation and regression model was employed and the research uses the secondary data in
the analysis. He concluded that, the cash conversion cycle and current ratio had a significant
negative relationship between the firm's profitability and liquidity level. The implication of
this study is that it is an eye opener to the present study in that he has look on the profitability
a d liquidity which affect the financial performance as an indicator of firms.

2.4 Presentation Of The Enterprise

A) Internship
An internship is an opportunity to integrate career related experience into an undergraduate
education by participating in planned supervised work. Most universities, especially
professional always send their students of internship because they belief that internship
contributes to the student personal and professional development main reason for student
going for internship is to give them the opportunity to do practical in their related profession
of all what they have been though in school. Some objectives of internship include.

- Internship provides valuable experience that help secure future employment.

- Provide career awareness to student
- Another benefit of internship is developing business contract. These people help the
intern find a job letter.
- Internship gives opportunities to work in career related or professional environment.
B) Creation and evolution
UNITEDCREDIT by innovation has its new COBAC-MINFI approval N ° 000000206 of
03/26/2020 declared by the Banking Commission of Central African States (COBAC):
UNITED CREDIT SA is a 2nd category financial institution in the legal form of a
385,000,000 FCFA and for its head office the DSCHANG agency located in the building
called was created thanks to the initiative of a group of young Cameroonians with a perfect
knowledge of the banking sector on 06/22/2013 and received its first approval on 07/22/2013
in the legal form of a 1st category EMF savings and credit cooperative and in compliance
with the new 2017 decree of the banking commission imposing on 1st category EMFs the
limitation of more than one branch for this category; this financial ETS has therefore gone
from 1st to 2nd category for compliance with this COBAC regulation and by its desire to set
up in the territory. At its creation, this company was better known under the name of YEMBA
UNITED CREDIT but for the sake of its establishment in the whole of the national territory,
of the cultural diversity that our country abounds, of the fact that the members of the board of
directors and the customers are not all originating from the West region of Cameroon this
denomination of YEMBA UNITED has been replaced by that of UNITED CREDIT SA
previously UNITED CREDIT COOP. It now has 04 agencies to its assets, including two (02)
in Douala (MBOPPI AND AKWA), one in DSCHANG and the other in YAOUNDE located
SHO opposite the Chamber of Agriculture. Regarding its location, we did our internship at the
Yaoundé agency located at the SHO crossroads located at a place called the Chamber of
Agriculture. As a result, our agency stands out from the others with its white, blue and green
covering and its fairly spacious building as well as a flower garden revealing sound under the
ground.

Objective
UNITED CREDIT has put in place objective which has enable them to provide amazing
financial services, offering connectable, efficient and trust worthy solutions to its customers.
• Bring financial services to the poor to help them fight against poverty

• It has a mission to reduce poverty and solve future economic problem through present
decision and action thereby viable citizen capable of living creatively in the society

• It also provides financial services to all its members

• UNITED CREDIT works towards poverty alleviation through uplifting of the rural sector by
the financing of agriculture and small and medium size enterprises
• To ensure that members are well treated in order to prospected more members-To improve
on the non-financial performance such change in technology and members.
Product and Services of United Credit
For so many years of existence of UC, she has been able to propose a variety of
products to her customers and prospective and profitability customers. These products and
services have enable UC to maintain sustainability and profitability which has contributed
enormously to her growth which include the following;

Main Services
The services of UNITED CREDIT SA can be summed up in two (02) main aspects: the
opening of accounts and credits
1.Account Opening
The bank account is the main support of a banker's relationship with his client. From an
accounting point of view, it is a table on which the transactions between the bank and the
holder client are recorded as they are carried out. At UNITED the different accounts are:
➤ Deposit account
At UNITED CREDIT SA there are 03 types under account in this large set it is:
 Savings Account
Sometimes called passbook account since it is still materialized by a passbook held by the
saver in some ETS. To open this account at UC it is necessary to fulfill the following
conditions:
 4*4 photos of the holder;
 Photocopy of CNI or valid passport
 Minimum opening 25,000 FCFA including 10,000 FCFA savings and first day;
ceilings 15,000 FCFA balance
 Location map of the holder's residence;
  It should be noted that the interest rate at UNITED is highly competitive and that the
client's savings generate 2.5% interest semi-annually 5% annually. and
 The cash receipt
The BDC is a term investment generally made with an ETS for a determined period which
results in the delivery of a registered or bearer bond. This account is subscribed as soon as a
savings account is opened and the opening conditions are the same except for the minimum
which differs
 Minimum amount: 500,000 FCFA
 Minimum duration 6 months
 02 4*4 photos of the account holder
 Location Plan.
 photocopy of CNI or valid passport
 Term deposits
It is identical to the BDC with the only difference that it is offered at UNITED
than to legal persons and of the amount which also differs
 2 4*4 photos of the holder
 Photocopy of CNI or valid passport
 Location Plan
 Minimum amount 2,000,000 FCFA
 Minimum duration: 6 months
 Current Account
At UNITED there are 02 types of current accounts:
 Private current account
This account is open to natural persons and results from an account opening agreement just
like the others. Its opening requires compliance with these conditions
 02 photos 4*4 of the holder
 Photocopy of CNI or valid passport
 Minimum account 31,500 FCFA including opening fees either 3500 FCFA 3000 or
5000 the check book and the rest in account
 Location Plan.
In this account the customer has payment media such as the check which depends on the
number of sheets and the needs of the customer either 25 sheets or 50 sheets.
  The commercial current account
It is opened in the name of a legal person (companies, association, NGO etc.). The conditions
are as follows;
 02 4*4 photos of the holder;
 Trade register;
 Status of the company;
 Patent title;
 Taxpayer card;
 Photocopy of the CNI of each valid signatory;
 Minimum 100 000FCFA;
 Opening fees;
 Minutes of designation of signature for companies and enterprises;
 Certificate of location;
 Location map of the holder's residence;
 Salary Accounts
 These are accounts where the salaries of external employees are transferred. There are
02 types at UNITED CREDIT SA
 Official account
The conditions are as follows:
 Integration/recruitment order
 Effective presence
 Pay slip
 Legalized photocopy of the CNI 02 and 4*4 photos of the holder
 Account (Private sector employee)
 The opening conditions are as follows
 Map of location of home or place of business
 Minimum at opening: 1000FCFA
 A slip or photocopy of the employment contract
 Photocopy of CNI or valid passport and 02 4*4 photos of the holder
NB: all these accounts since the beginning of 2020 have been assigned a unique identifier
number (NIU).
2.Credit
At UNITED CREDIT SA the credits are diverse and adapted to the needs of each client.
There are several at UNITED CREDIT SA
The bank overdraft
It is an authorization given by the bank to a customer to pass his credit account during a
certain period. In general, the bank overdraft is used for one-off problems that can be repaid
over a single installment.
 The CCT (short term credit)
It is a credit whose duration is generally less than two years.
Discount
The discount is the transfer of a commercial paper (liquid debt security payable in the short
term, negotiable by endorsement and payable to the person who holds it) to a bank in
exchange for an immediate cash advance. The amount of a bill is discounted at 60% of the bill
Factoring
Identical to the discount except that it consists in entrusting to a third organization the
management of its receivables in order to obtain an early repayment.
 Clearance
 School credit
 The caution
 campaign credit
 Spot credit
The financing of public contracts which, with the CCT loan, is the subject of
our studies. Here it is a contract between the State and an individual; the documents required
are the NOTICE (Irrevocable Transfer Certificate) which is a document through which the
State through a competent body the general paymaster certifies that the payment will be made
in the account of UC photocopies of the boxes and good control.
B. Ancillary Activities
These ancillary activities are those related to the main ones:
 Exchange which is an activity allowing the exchange, the purchase and the sale of
currencies by converting them.
 Transfer of funds through sending networks such as AFRICASH
 Sale and recharge of visa card
  Micro insurance
C. Partners and Customer of United Credit SA
 partners
The partners of UNITED CREDIT SA are numerous, they are mainly:
 DHL
 UBA
 MTN CAMEROON
 ORANGE CAMEROON
 BGFI BANK; which is one of its most important partners since half of its banking
transactions go through it.
➤ UC CUSTOMERS
 As the general rule of a MICROFINANCE wants it, the customers are in general those
living for the majority in margin of the traditional banking circuit; as target UNITED
CREDIT SA works with:
 traders
 the spinach-sellam
 Farmers
 public and private sector employees
 associations/tontines /GIC/NGOs/SMEs/SMIs
 service providers
 school ETS
 public and similar contracts
 businessmen
The main competitors of UC are mainly banks and other MFIs, the most visible are
REGIONAL D'EPARGNE DE CREDIT SA, MUPECI, MC², LE CREDIT POPULAIRE,
SGC.
2.4.1 Activities carried out
During our internship at UNITED CREDIT SA we had to perform certain tasks in different
departments of the agency to perfect our theoretically received lessons.
1.Reception and Internship carried out
During our stay at UC we carried out many tasks in different departments of the structure.
This is the service of:
➤ The front office (Hall): represented by the services visible to all, this was the
first service to welcome us and where we did almost 02 weeks. During this time we had to
welcome customers, welcoming the customer is the main task of this service because it is full
of seriousness on the part of the staff who exercise it, patience is essential for him because
you have to know find the right tone and the most satisfactory way to manage the excesses of
anger of certain customers; always in this service we had to open bank accounts by gathering
the documents necessary for the opening, to assist the customers during their operations of
payment and withdrawals of cashing of checks;
➤ The accounting Department (Back office): during our time in this department we had to do
bank reconciliation statements, verification of accounting documents, classification of
accounting files by referring to the various documents already entered beforehand;
► The credit department: this department is the department where we spent most of the time
of our internship the tasks carried out in this department relate to the credit activities that we
clearly presented in the second point in the continuation of our research;
➤ The sales department: here we mainly had to promote the UC SA services by carrying out
field visits during prospecting in strategically targeted
2.4.2 Internship Experience
During the internship at UC the researcher had the opportunity thave an indepth knowledge of
the activities performed in micro finance. The experience is view under the professional and
personal experiences.
Professional Experience
Professionally, the internship was an opportunity for the researcher to have a hand-on-job
experience on the banking professional is viewed. Also, the researcher had the opportunity to
accquaint himself with practical life situation quite different from the theory learned in school
Personal Experience
Personality, the researcher gained a rich personal experience on how to work with others as a
teamt since working in an institution you get to meet people with different cultural and social
diversities, Hence the researcher learns to cope with different work pressure that could be
encountered while working in an institution. In all it was a good experience
2.4.3 Strengths and Weaknesses
Strengths
UC SA is a category 2 micro finance institution with a capital of 385, 000, 000 FCFA which
permits them to carry out any transaction to the satisfaction of their customers, be it
withdrawals of many form and even loan grating UC SA members have the ability to see
information concerning their account using sms alert in any town they may find themselves
as long as there is a UC branch .UC micro finance institution also practices very encouraging
interest rates both in loan grating as well as savings as compared to other micro finance
institutions who also adds as a stronghold to the organization. The organization achieve its
objectives. Unlike micro finance institution, customer from UC SA. have the possibility of
benefiting from special financial services like speedy loans,and special overdraft facilities
where a customer can request for an additional overdraft case of an emergency to add to these
UC sent messages to their members' daily(not only daily members butadiene) account as an
assurance that their money is in safe hands, thus going a long way to increase the trust the
customers have on the institution. Also SA has a strong relationship with their customers
which is their main power since the manner the treat their customers permits them to attract
more .

Weaknesses
During loan granting despite the fact that the documents are mounted by the branch approval
only comes from the head office making the branch to seem weak and unable to make good
decision concerning the organization.
Internet connections are sometimes very slow causing the slowdown of activities like
withdrawals.There is also the lack of agency which is a great problem and affects their
activities and that of customers.
2.4.5 Problems encountered
During the period of our internship in UA face some problems, the following shortcomings
were noticed;
• The network connection was slow and most at times the customers had to be kept waiting
for long
Non-exhaustion of document by customers which might cause problems in the future if the
customer notices something that he did not like
The faced difficulties during the period of marketing trying to convince individuals to open
accounts with the institution and some customers were very difficult and already had terrible
experiences with other micro finance institution as some had closed down with their
investment .
CHAPTER 3
 METHODOLOGY

This chapter represent the different and various methods used by the researcher to obtain relevant
data. Different methods of data collection can be used depending on the area or issues to be
discussed. This research made use of qualitative and quantitative methods of research in order to
have a comprehensive view of the work.

3.1 Research design

A research design is a plan or approach which specifies how data relating to a given problem should
be collected and analyzed. The research design used is a correlational research design. That is, the
research made use of quantitative method which was used with the help of a questionnaire.
Meanwhile qualitative data or method was done through interview to ascertain the management of
investment funds on the performance of a public establishment. The rational of this approach is
based on the fact that the information collected from the sample will represent the rest of the study.

3.3 Population of the study

The population of the study is made up of the workers of UNITED CREDIT SA and some customers.

3.4 Sampling Frame

This has to do with the set of elements which are sampling techniques and sampling size.

3.4.1 Sampling technique

The instrument used in collecting data is questionnaires. A sample of 30 questions were been
distributed by the researcher to the respondent. The main instrument of data collection here
was questionnaire. A sample of size of 20 respondents was used. The questionnaires were
administered to the employees working in UC SA. Self-administered questionnaires were
popular because the respondent filled them at their own convenience and appropriate for large
samples. The questions were close ended and open questions. This is because the questions
were answered by a simple ‘yes’ or ‘no’ which was the close ended questions and the open
ended questions were for the respondents to give their own opinions. The questionnaire was
divided into three main sections. The first section seeks to know the personal information of
the respondents. Section two was to gather information on the effectiveness of cash
management in UC SA and the cash management techniques. Some respondents agreed and
others disagreed on the cash management techniques administered in the institution like speed
cash collection, account receivables, cash, projects, credit policy and others.

3.4.2 Sampling size

The sample size was composed of 20 members of UC SA. A questionnaire was distributed
and after collection, it was discovered that all of the questionnaires were filled and returned,
thus the response rate of the study was calculated and gave a percentage of 100% which was
really appreciated for the study.
3.5 Sources of data collection

Data for this study was collected from primary and secondary source. The primary sources of
data were obtained through the use of questionnaire which was administered to the members
who were coming to carry out one or two transactions during work. Meanwhile, secondary
sources of data were obtained from the internet, book and other document from the
organization.

3.5.1 Primary data sources

Primary sources of data were gathered through questionnaire, observation and

interview.There is a list of research questions asked to respondents and designed to extract
specific information in relation to the topic. The research made use of close question which
involves providing alternative responds such as strongly agreed, agreed, strongly disagreed
and disagreed for the respondent to place a tick in box against their opinion. These questions
were directly handed to members of by the researcher.

3.5.2 Secondary data sources

Secondary data is data that has already been collected for some other purposes, proceed and
shared. Secondary source of data such as textbooks, internet and literature notes, information
relating to this work was gotten from books INUCASTY school library school library,
organization archive and other journals. Adequate data on the topic was gotten from internet
which was instrumental in the writing in all information’s.
3.6 Validity and reliability of the instrument
Validity and reliability involve checking the instruments of the research if they are valid and
reliable. The research instrument in this work was consistence and confidential in all the
information.

3.6.1 Validity of the instrument

The researcher of the after constructing the questionnaire gave social science researchers to
read. They reviewed them in terms of clarity and appropriateness to the needs of the study.
This exercise was to ensure that the pre-test or pilot test be carried out after the face counted
validity of the questionnaire.
Face validity

After the construction of the questionnaire, it was handed to the supervisor of the project
which he did critically examine the items, checking the appropriateness and all the necessary
collections were made. With this, face validity was obtained.

Content validity

The project supervisor accessed the content validity of the questionnaire by examining each
item that was constructed in relation to the objective of the study. After making vital and
objective correction, the project supervisor confirmed the relevance of the items to the
objectives of the study. This exercise gave the questionnaire its content validity.

3.6.2 Reliability of the instrument

Reliability refers to the consistency of an instrument to measure 0what is supposed to measure

under the same condition across time. It means that the instruments will be reliable if they
produce the same results overtime and under the same conditions.

3.7 Method of data analysis

Data gotten from questionnaire that was filled is presented in table form. Conclusions were
drawn at the end of each analysis from various hypotheses. SPSS and calculator was used in
the analysis. Tables are presented in simple form to ease interpretation. The data is as follow
Y=B0+B1X1+B2X2+B3X +E
Where: Y= Profitability which is the dependent variable will be measured on assets, net
income. ROA is the ratio of net income after taxes to the total assets
X1=Speedy cash collection will be measured using the ratio short term loans, accounts
receivables and cash inflows
X2=Credit policy will be measured by payment terms used by the organisation
X3=Cash disbursement will be measured by amount of cash outflows
X4=Cash budget will be measured on cash inflows and outflows of the business
B1=Coefficient of the independent variable i which measures the responsiveness of Y to chang
X2, X3, X4 are the control variables

The f-test was used to determine the significance of the regression. The coefficient of
determination (R2) is defined as the sum of squares due to the regression divided by the sum
of total squares. Usually R2 is interpreted as representing the percentage of variation in the
dependent variable explained by variation in the independent variable. This is defined in
terms of variation about the mean of Y (profitability) so that if a model is rearranged and the
dependent variable changes, R2 changes. Correlation analysis was carried out find the
direction of the relationship between ROA and the independent variables.

3.8 Ethical consideration

Some of the ethical considerations used in this research are:
 Confidentiality
 Anonymity
 Informed Consent

• Voluntary Participation
 CHAPTER FOUR

RESULTS AND DISCUSSION

This chapter gives the presentation, analysis and interpretation of the data collected from
field. The essence of this study was to ascertain the role of cash management on the
profitability of micro finance institions . It shall be reminded that the sample selected was 20 ,
for which a response rate of 100 % was achieved. This chapter is arranged according to the
selection of the questionnaire.

4.1 Presentation of demographic data

4.1.1Gender of respondents

The study sought to find out the gender of the respondents with the presumption that variation
in gender could influence opinions. Gender here is to find out the number of male and female
who work in the institution and to bring about gender equality. The correspondence was to
identify where they belong as it is presented on the table below.

Gender of Respondents

Frequency Percent Valid Percent Cumulative

Percent

male 11 55,0 55,0 55,0

Valid female 9 45,0 45,0 100,0

Total 20 100,0 100,0

Source; field work August 2023 (Source: Authors findings using SPSS), same source for
other tables
Figure 1: Showing gender
From the above analysis, it can be seen that the study population comprised of 55, 0% of male
employees and 45, 0% of female employees. These gives the true diversified criteria needed
to establish the subject matter in question as the issue in question might be gender related.

4.1.2 Age of respondents

The study sought to find out the age of the respondents with the presumption that variation in
age could influence opinions. Age here is to find out the number of young and old who work
in the institution and to bring about age. The correspondence was to identify where they
belong as it is presented on the table below.

Age of Respondents

Frequency Percent Valid Percent Cumulative

Percent

Valid less than 20 1 5,0 5,0 5,0

20-30 9 45,0 45,0 50,0

 31-40 8 40,0 40,0 90,0

41 and above 2 10,0 10,0 100,0

Total 20 100,0 100,0

Source; field work August 2023 (Source: Authors findings using SPSS), same source for
other tables
Figure 2: Age of respondents
From the above analysis, it can be seen that most of the employees are under the age of 20 to
30 and also 31-40. The remaining are under the age of less than 20 and 41 and 40 and above
comes as the minority. These gives the true diversified criteria needed to establish the subject
matter related thus this ensuring continuous efficiency in the services rendered by staffs.

4.1.3 Marital status of respondents

The study found out that 6 of the respondents were single, 13 were married and 1 is divorced.
As shown on the table below.

Marital of respondents

Frequency Percent Valid Percent Cumulative

Percent

single 6 30,0 30,0 30,0

married 13 65,0 65,0 95,0

Valid
divorced 1 5,0 5,0 100,0

Total 20 100,0 100,0

Source; field work August 2023 (Source: Authors findings using SPSS), same source for
other tables .
Figure 3: Marital status of respondents
The above analysis helped the researcher to deeply understand UC SA staff and compare their
statues with their responsibilities .Finding revealed that the majority of Married workers
represent and active population at the work .
4.1.4 Education of respondents
This particular parameter is very necessary as the educational level of the respondent has a lot to do
as it takes one who educated to recognize and do things up to the expectation of the society. Also
note that, it becomes more trivial issue when one starts talking about the role of cash management
on the profitability MFIs to people of a limited education background. This is presented below.
 Education of respondents

Frequency Percent Valid Percent Cumulative

Percent

first school 1 5,0 5,0 5,0

ordinary level 6 30,0 30,0 35,0

Valid advenced level 8 40,0 40,0 75,0

hnd and above 5 25,0 25,0 100,0

Total 20 100,0 100,0

Source; field work August 2023 (Source: Authors findings using SPSS), same source for
other tables
Figure 4: showing the level of education of respondents
Education level of the respondents range from primaryeducation to the university level. From
the above analysis, it projected that 5% have fslc, 30% have ordinary level, 40% advance
level and 25% with hnd and above as observed in the above graph. The shows that most
workers of UC SA are qualified in attaining the objectives of the organization and to produce
good results in other enlarge the profits margin of the organizations. With best of knowledge,
work moves smoothly.

4.1.5 Longevity of services of respondents

Longevity in service here is trying to tell us the length of time in which people do work in the
organization (UC SA). It will be represented on the table below.

Longevity of service of respondents

Frequency Percent Valid Percent Cumulative

Percent

1 to 3 2 10,0 10,0 10,0

3 to 6 7 35,0 35,0 45,0

Valid 6 to 9 8 40,0 40,0 85,0

9 and above 3 15,0 15,0 100,0

Total 20 100,0 100,0

Source; field work August 2023 (Source: Authors findings using SPSS), same source for
other tables
Figure 5: Showing the longevity in service
From the table above, it is observed that 10,0% of the respondents have been in UC SA for 1-
3 years. This means that they are very well experienced with the operations of the institution.
35,0 of the respondents have worked in UC SA between 3 to 6 years, and 40% had working
experience from 6 to 9 years in UC SA and finally 15% of the respondents have been there
for about 9 and above. which also show that the working experience is not bad to an extent
with the operation of the institution UC SA.