INVENTORY MANAGEMENT TECHNIQUES AND FINANCIAL PERFORMANCE OF LISTED OIL AND GAS COMPANIES IN NIGERIA

Abstract

More often than not, Oil and gas companies, like every other companies’ are faced with the issue of inventory management techniques and financial performance. As a result of oil drop, inadequate maintains of pipelines and tank installation and coupled with COVID-19 pandemic has affected the production capacity of oil and gas production and exploration. To that end, this study investigated the relationship between inventory management techniques and financial performance of listed Oil and Gas Companies in Nigeria. The specific objectives were to: ascertain the relationship between inventory turnover and profit after tax; evaluate the relationship between operating cycle and profit after tax; determine the relationship between inventory conversion period and profit after tax; evaluate the moderating relationship between firm size on inventory management techniques and financial performance, and finally, evaluate the moderating relationship between operational efficiency on inventory management techniques and financial performance of listed Oil and Gas Companies in Nigeria. Five research questions and five hypotheses guided the study. The study conceptual framework guided the review of related literature. The Researcher used ex-post facto research design. Targeted population comprised of ten listed Oil and Gas Companies in Nigeria which were sampled to eight (8) using purposive (Judgmental) sampling technique.  Secondary data were used and it was sourced from annual reports and statement of accounts of the selected companies between 2013 and 2020. Descriptive statistics, correlation analysis and ordinary least Square regression were employed with the aid of Microsoft Excel, SPSS 25 and E-View 10. The result of the study showed that there is a negative and insignificant relationship between inventory turnover and profit after tax; there is a negative and insignificant relationship between operating cycle and profit after tax; there is a negative and insignificant between inventory conversion period and profit after tax; firm size has negative and significant relationship between with inventory management techniques but has positive and significant relationship with financial performance; and finally, operational efficiency has positive and significant relationship between with inventory management techniques and financial performance. The study generally concluded that, there is a negative and insignificant relationship between inventory management techniques and financial performance of listed Oil and Gas Companies in Nigeria under the period of study between 2013 and 2020. It was recommended amongst others that Firms should evaluate operating cycle when planning to sell and replacing inventories because this study result revealed that it has negative and insignificant relationship with profit after tax.