ABSTRACT
The
study analyzed impact of working capital management on firms’ performance in
Nigeria. Data was sourced from Annual Reports of five listed manufacturing
companies in Nigeria from 2000 to 2018. The firms’ five manufacturing firms selected
were Guinness Nig. Plc., Unilever Nig. Plc., Nestle Nig. Plc., 7up Bottling
Nig. Plc. and May & Baker Nig. Plc. Firms performance which was the
dependent variables was measured by return on assets, while working capital
management (WCM) was proxied by inventory conversion period, debt collection
period and creditors’ payment period, cash conversion period and sales revenue.
Other variables, that is, control variables like broad money supply and cash
reserve ratio were included in the model. The data analysis commenced with the
panel unit root test which revealed that the data collected had mixed
integration, thus resulting to the use of pooled mean group (PMG) approach to
panel data analysis. Prior to the PMG estimation, panel residual cointegration
tests based on Pedroni and Kao approaches revealed that a long-run relationship
existed between working capital measures and firm performance. The error
correction mechanism of the PMG revealed a rapid adjustment from short-run
disequilibrium to long-run equilibrium if the model. Specifically, the long-run
equation showed that inventory conversion period, debt collection period and
creditor’s payment period had negative long-run impact on return on assets of
selected companies with only debt collection period been significant. On the
other hand, cash collection period and sales revenue had positive and
significant impact on return on assets in the long-run. These clearly confirmed
that debt collection period, cash conversion period and sales revenue were the
most significant working capital management variables in the regression model. Based
on these findings, policies aimed at enhancing working capital management and
performance of listed firms such as ensuring proper inventory management
system, reducing debt collection period, improving cash conversion period were
recommended.
DORIS, A (2024). Impact Of Working Capital Management On Performance Of Manufacturing Firms In Nigeria:- Nnabue Doris A. . Repository.mouau.edu.ng: Retrieved Oct 10, 2024, from https://repository.mouau.edu.ng/work/view/impact-of-working-capital-management-on-performance-of-manufacturing-firms-in-nigeria-nnabue-doris-a-7-2
A., DORIS. "Impact Of Working Capital Management On Performance Of Manufacturing Firms In Nigeria:- Nnabue Doris A. " Repository.mouau.edu.ng. Repository.mouau.edu.ng, 04 Sep. 2024, https://repository.mouau.edu.ng/work/view/impact-of-working-capital-management-on-performance-of-manufacturing-firms-in-nigeria-nnabue-doris-a-7-2. Accessed 10 Oct. 2024.
A., DORIS. "Impact Of Working Capital Management On Performance Of Manufacturing Firms In Nigeria:- Nnabue Doris A. ". Repository.mouau.edu.ng, Repository.mouau.edu.ng, 04 Sep. 2024. Web. 10 Oct. 2024. < https://repository.mouau.edu.ng/work/view/impact-of-working-capital-management-on-performance-of-manufacturing-firms-in-nigeria-nnabue-doris-a-7-2 >.
A., DORIS. "Impact Of Working Capital Management On Performance Of Manufacturing Firms In Nigeria:- Nnabue Doris A. " Repository.mouau.edu.ng (2024). Accessed 10 Oct. 2024. https://repository.mouau.edu.ng/work/view/impact-of-working-capital-management-on-performance-of-manufacturing-firms-in-nigeria-nnabue-doris-a-7-2