ABSTRACT

 This study examined the effect of cash flow components on the financial performance of quoted manufacturing firms in Nigeria. It examined the influence of the major cash flow components on the financial performance variables of quoted manufacturing firms in Nigeria. The research design adopted was the ex-post facto research design. The data was sourced from the financial statements and annual reports of the selected manufacturing firms from 2005 to 2015 and from the Nigeria Stock Exchange reports. The hypotheses were tested using a multiple regression analytical tool with the aid of Eview Statistical Software version 8.0 The financial performance variables proxied by Return on Assets (ROA), Earnings Per Share (EPS) and Market Price Per Share (MPS) were measured against the major cash flow components: Cash flow from Operations (CFO), Cash flow from Investing (CFI), and Cash flow from Financing (CFF) activities. Eleven quoted manufacturing companies were purposively selected from the population and also based on the availability of data. The result of the study showed that operating and investing cash flows have significant and strong positive effect on the performance of manufacturing firms in Nigeria. It was also found that financing cash flows have negative and weak effect on the firms' performance. From this study, improvements in the liquidity management of manufacturing firms will result in improved financial performance. This study therefore recommends that there should be due diligence in the financial decision of firms concerning the management of their funds, manufacturing firms should boost their market value for improved performance through diverse investments, operation efficiency and financing activities and regulatory authorities such as the Nigerian Stock Exchange (NSE), Corporate Affairs Commission (CAC), Securities and Exchange Commission (SEC) should be scrutinizing their financial statements and encourage companies to set up a result oriented cash flow system. More so, external auditors should be encouraged to use cash flows ratios in evaluating the performance of a company before forming an independent opinion on the financial statement. This will give detailed information on the financial performance of the company to enable investors make effective investment decisions.