WORKING CAPITAL MANAGEMENT AND FINANCIAL PERFORMANCE OF LISTEDINDUSTRIALGOODS MANUFATURING COMPANIES IN NIGERIA

Abstract

Business organizations try to maintain financial sustainability in the long run and ultimately try to maximize shareholders’ wealth. It has been argued that financial constraints in short term are a major barrier to the firms’ long term financial success. Working capital has been seen as the basic factor that affect firm’s ability to continue their day-to-day business operations with financial stability. To that end, this study determine the effect of working capital management on financial performance of listed industrial goods manufacturing firms in Nigeria. The ex-post facto research design was adopted and seven firms were purposively selected out of thirteen (13) listed industrial goods manufacturing firms in Nigeria for the period 2014-2023. Data was collected from the annual reports and accounts of the sampled firms and tested by means of descriptive statistics, unit root test and Ordinary Least Square (OLS) multiple regression with the aid of Microsoft Excel and E-View 12. Findings indicated that average collection period had an insignificant effect on return on assets. Also, inventory conversion period had an insignificant effect on return on assets. Furthermore, cash conversion cycle had an insignificant effect on return on assets of listed industrial goods manufacturing firms in Nigeria. Given the findings, it was concluded that working capital management insignificantly influenced financial performance of listed industrial goods manufacturing firms in Nigeria. The study therefore recommends that managers in industrial goods firms should devise different aspects of working capital to maintain a trade-off between the current obligation that is short term and long term liquidities, because this finding indicated average collection period, inventory conversion period and cash conversion cycle has insignificant effect on financial performance measures.