Overriding the financial challenges of state mass transport companies in Ghana: A Case Study of Metro Mass Transit Company Limited

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Date
October, 2015
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Abstract
In Ghana, many transport companies have collapsed; among them are City Express Services (CES), Omnibus Service Authority (OSA), Kingdom Transport, Opoku Transport and the near collapse of State Transport Corporation (STC). The public transport sector of Ghana is on the verge of collapse, largely due to mismanagement, unproductive attitudes of employees and ticket racketeering This study identifies the various solutions that can override the numerous financial challenges facing Metro Mass Transit Co. Ltd. The objective is to examine the management practices, it effectiveness and effects on the performance of Metro Mass Transit Co. Ltd. In order to achieve the objectives of the study both primary and secondary data were obtained to assess the financial performance and identify the enormous challenges facing the company. Data collection instruments used were questionnaires and audited annual financial reports of Metro Mass Transit Limited for the period 2009 to 2013. The collated primary data was processed and analysed using the Statistical Software Programme for Social Sciences (SPSS version 17), whereas the secondary data with regards to the performance and management financing decisions or practices was analysed using Microsoft-Excel version 2010. Financial ratios were employed as tools for measuring the performance of MMT and to determine their financing decisions from 2009 to 2013. The result of the study showed that performance of MMT has been abysmal over the years and most of the financial management practices or decisions have had a negative impact on the profitability of the company. Staffs of the company are also distraught about their conditions of service. MMT Ltd has long and positive cash vi conversion cycle implying that it takes the company longer days to convert its inventory into cash to pay its suppliers for goods and services thus suppliers are paid through external financing such as overdraft. The liquidity ratios were too high which suggest inefficient use of short-term financing facilities. The company is also highly leveraged though the leverage level of 4.36 in 2009 has reduced to 1.24 in 2013; this has affected profitability negatively as Operating profit Margin also reduced from 20.25% in 2009 to 2.92% in 2013. The study recommends that management of MMT must improve on their working capital management and also reduce their operational cost to remain competitive in the transport industry.
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In partial fulfillment of the requirement for the award of Master of Business Administration degree in finance School of Business (KSB),
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