CURRENT ASSETS INVESTMENT AND FINANCIAL PERFORMANCE OF LISTED INDUSTRIAL GOODS MANUFACTURING FIRMS IN NIGERIA

Abstract

Efficient investment in current assets is a crucial factor in enhancing the financial performance of industrial goods manufacturing firms which in turn can reposition the sector to contribute significantly to the growth of Nigerian economy. To that end, this study investigated the relationship between current assets investment and financial performance of listed industrial goods manufacturing firms in Nigeria. The study sought to ascertain the relationship between inventories and return on assets, investigate the relationship between trade receivable and return on assets, and investigate the relationship between cash and cash equivalent and return on assets. Three research questions and three hypotheses guided the study. The study was an ex-post facto research design. The population of the study was nine (9) listed industrial goods manufacturing firms in the Nigerian Exchange Group were sampled to five (5) using purposive sampling technique. The data used in this study were sourced from annual reports and statement of accounts of the selected firms between 2010 and 2020. The method of data analysis was descriptive statistic and multiple regression of Ordinary Least Square (OLS) with the help of E-view. The empirical findings showed that, there was a negative and significant relationship between inventories and return on assets, there is a positive and insignificant relationship between trade receivable and return on assets, there is a positive and significant relationship between cash and cash equivalent and return on assets of listed industrial goods firms in Nigeria for the period 2011 to 2020 in Nigeria. Therefore, the study concluded that, there is a positive and significant relationship between current assets investment and financial performance of listed industrial goods manufacturing firms in Nigeria. The study recommended amongst others that, firms should invest more on inventories because the empirical evidence indicated that it has significant return to shareholders.