Working Capital Management and Corporate Financial Performance of Consumer Goods Sector in Nigeria

Abstract

The study assessed the impact of working capital management on corporate financial performance of consumer goods sector in Nigeria. The study specifically determined the impact of average collection period on the return on assets of consumer goods industries in Nigeria; assessed the effect of cash conversion cycle on the return on assets of consumer goods industries in Nigeria and evaluated the effect of average payment period on the return on assets of consumer goods industries in Nigeria. Panel data spanning five years (2013-2017) was gathered for five consumer goods firms in Nigeria. Panel estimation techniques such as descriptive, correlation, fixed effect (cross section and time specific), random effect and other post estimation tests was used in the study. Findings from the study indicated that average collection period exerts negative insignificant impact on the profitability of consumer goods firms with coefficient estimate of -.0000662(p=0.848>0.05); cash conversion cycle exerts negative insignificant impact on profitability of consumer goods firms with coefficient estimate of - .0002468 (p=0.527>0.05) and average payment period exerts negative significant impact on the profitability of consumer goods firms in Nigeria with coefficient estimate of .0016386 (p=0.049<0.05). Premise on these findings, the study suggested that management of manufacturing firms should adopt effective cost reduction strategies, measures to control labour cost vis-à-vis ensuring adequate supervision of workers, monitor firm’s assets and occasion employee training.

Working Capital Management And Financial Performance Of Technical Vocational Education And Training Institutions In Meru County, Kenya

“…Working capital management is the management of the short-term investment and financing of any organization. It is a category of resources that includes cash, inventory and receivables, minus what a company owes in the short terms (Adamu, 2016). Working capital comes straight from the statement of financial position (previously referred to as balance sheet) of the firm, and it is often calculated according to the formula: Working capital = Current Assets -Current Liabilities or Inventories + Accounts receivables -Accounts payables -Advances received = Working capital.…”