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Working Capital Management and Financial Performance of Listed Manufacturing Firms in Nigeria

Pereowei, Augustine O.; Korumene, Bernard E.

This study investigates the impact of working capital management on financial performance of quoted manufacturing firms in Nigeria. The period which the study covers is from 2005 to 2019 of sixteen listed manufacturing firms in the Nigerian Stock Exchange as information about them is extracted from their financial statements. The dependent variables are financial performance proxied by ROA while the independent variables are Average Collection Period (ACP), Average Payment Period (APP) and Cash Conversion Cycle (CCC). The Panel Ordinary Least Squares analysis reveal identical results for the two models in the sense that while ACP is negatively and statistically significant with both ROA at 1% level; APP and CCC, on the other hand, are positively significant with both ROA at the 1% level also. We recommend that firms in this industry should maintain and improve on their present policy with respect to average payment period (APP) and cash conversion cycle (CCC) since APP and CCC are respectively positive and statistically significant with ROA, but they should investigate the ACP so as to realign it with APP and ACC since it negates ROA.