ABSTRACT

This research work aimed at providing empirical evidence on the effects of Working Capital Management on Corporate Profitability of Manufacturing Firms in Nigeria. There are indeed numerous challenges confronting Nigerian Firms in attempt to effectively manage their Working Capital. The researcher, having buttressed these problems, also proffered solutions and recommendations to ameliorate these challenges, which are anchored on obtaining optimum profitability. To this end, some of the problems that propelled the researcher to go into this area of study include the mixed findings that have shrouded this particular area of study, hence to contribute towards determining the relationship that exists between Working Capital components and Profitability of Manufacturing Firms, as well as the relationship that exists between Cash Conversion Cycle and Net Operating Income of Manufacturing Firms; these were also the research objectives. Two Hypotheses were formulated in a null form. Two Firms (Guinness Nig. P/c. & PZ Cussons) were selected for this study for a period of ten (10) years (2004- 20 13) Financial Years. The data were collected through secondary sources and analyzed using Simple Regression and Pearson correlation Analysis. The study discovered that there is a significant relationship between some of the Components of the Working Capital and Profitability of the selected Firms, and that proper Working Capital Management positively affects Profitability. Conclusively, the study recommends the following: adequate Cash Budget, the firms should maintain optimum stock level, reduce Average Collection Period, increase Average Payment Period; and responsible Working Capital management.