ABSTRACT

Without a doubt, the ultimate objective of any firm is to maximize profit. However, it is the various components of working capital and its efficient management that helps to preserve liquidity, maintain efficient and effective allocation ofresources and maximize financial performance. This study was carried out to determine the effect of working capital management on the performance of some quoted firms in Nigeria with specflcobjectives to establish the effect of working capital management measured by Gross Working Capital (GWC) and Net Working Capital (NWC) on the Return on equity (ROE) and Return on asset (ROA) in a 2 model structure. The study made use of the ex-post factor research design and extracted data from annual reports offive (5) quoted firms selected from the Nigerian Stock Exchange from 2010-2016. Employing the panel least square multiple reess ion model in a data set of thirty-five (35) observations, the result showed that working capital management has significant predictive ability on both measures of performance, ROE and ROA; GWC has a sign ?fIcant negative influence on ROE and also on ROA while NWC exerts a significant positive influence on ROE but an ins ignflcant positive influence on ROA at 5% level of probability. The study concluded that working capital management has a sign flcant effect on financial performance of quotedfirms in Nigeria through its effect on profitability which represents a standard criterion to appraise the performance of a firm. The study therefore recommended that management of firms should maintain or increase the profitability and performance of their companies and shareholders by keeping its Gross working capital and its Net working capital to a possible optimal level. Gross working capital can be optimized through reducing excess cash or idle funds by investing them in evaluated profitable projects or more yielding fixed assets.