Working Capital Management and Profitability: A Study of Selected listed manufacturing Companies in Nigerian Stock Exchange

Salman, Asma; Folajin, Oyetayo O.; Oriowo, A. O.

doi:10.6007/ijarbss/v4-i8/1097

Cited by 6 publications

(4 citation statements)

References 2 publications

(1 reference statement)

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“…The conceptual framework for this current study is working capital management (WCM) (Figure 1). Salman et al (2014) clearly pointed out that, accounts receivable management involves making good credit customers choice as well as increasing the rate of collecting from them. Economically, when debtors are permitted to cling to payments for longer period, companies are pushed into a position that incurs an opportunity cost.…”

Section: Conceptual Framework Of Working Capitalmentioning

confidence: 99%

Empirical Study on the Impact of Account Receivables and Inventory Conversion Cycle on Profitability of Manufacturing Firms Listed on Ghana Stock Exchange

Lazarus,

Kwame,

Rakibu

et al. 2023

OJBM

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The purpose is to investigate the effect of account receivables and inventory conversion cycle on performance of Manufacturing Firms Listed on Ghana Stock Exchange. The paper adopted cross-sectional study which adopts quantitative research approach. A panel data of six (6) listed Ghanaian manufacturing firms on the Ghana Stock exchange for the periods 2011 to 2020 was used for the study. Data was obtained from the audited financial statements of the firms. Correlation and Ordinary Least Square (OLS) multiple regressions were employed to analyse the data. The finding revealed that there is statistically negative (Beta = −0.201) and significant (P-value = 0.000) effect of account receivables period on return on assets. The study revealed that there is statistically significant negative effect between inventory conversion period and return on asset (Beta = −0.273, P < 0.05). The results indicated that (current ratio, sales growth and cash to sales) had no significant positive effect (Beta = 0.115, P > 0.05), (Beta = 0.071, P > 0.05), (Beta = 0.092, P > 0.05) on return on asset.

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Section: Conceptual Framework Of Working Capitalmentioning

confidence: 99%

Empirical Study on the Impact of Account Receivables and Inventory Conversion Cycle on Profitability of Manufacturing Firms Listed on Ghana Stock Exchange

Lazarus,

Kwame,

Rakibu

et al. 2023

OJBM

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“…Olaoye et al (2019) noted that profitability examines the effectiveness and efficiency with which equipment, plant and current assets are modified into profits. The authors further noted that profitability can be ascertained through Return on Assets (ROA), Return on Equity (ROE), Net Profit Margin (NMP) and Profit after Tax (PAT), means a firm's ability to generate satisfactory return on invested capital through which shareholders are happy and prospective investors are motivated to invest (Salman, et al 2017). To achieve the desired profit level and keep the business going, literature affirmed that the management of working capital components, particularly the cash conversion cycle, is indispensable in that firms' profitability might decrease if the costs of investment in working capital increase faster than the benefits of granting more trade credit to customers or holding more inventories (Gill et al, 2010;Ehiremmen, 2017).…”

Section: Growth Of Profitmentioning

confidence: 99%

Liquidity and Profitability Ratios on Growth of Profits of Listed Oil and Gas Firms in Nigeria

Appah¹,

Onowu²,

Tonye³

2021

African Journal of Accounting and Financial Research

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This study empirically examined liquidity and profitability ratios on the growth of profit of listed oil and gas firms in Nigeria. The study employed ex-post facto and correlational design and the data was obtained from the annual reports of sample companies for the period 2014 to 2019. The secondary data obtained from the published financial statements of the sampled firms were analysed with descriptive, correlation matrix and multiple regression. The results obtained from the multivariate analysis suggested that current ratio, acid test ratio, gross profit ratio, net profit ratio, net working capital, return on assets, return on equity and return on capital employed do positively and significantly affect the growth of profit of listed oil and gas firms in Nigeria. The study concluded that liquidity and profitability ratios influence the growth of companies. The study therefore made the following recommendations amongst others that firms should use financial ratios to measure the level of corporate profit growth to comprehend the conditions of firms which may eventually affect the investment decisions.

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“…It is because of these worries that the working capital, management and operational efficacy of Nigerian companies has been seriously affected, and they are now in a state of operational embarrassment (Ironkwe & Wokoma, 2017). It is imperative that working capital managers avoid the challenges of retaining idle money (create no profit) and insufficient working capital (which diminishes the firm's profitability as well as causes production delays and inefficiencies) by acquiring an appropriate amount of working capital (Salman, Folajin, & Oriowo, 2014).…”

Section: Introductionmentioning

confidence: 99%

Does Working Capital Management Drive Firm Financial Performance? Evidence from Developing Nation

Olunuga

2022

JIKA

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This study examines the impact of working capital management on the financial performance of Nigerian businesses. Working capital management (WCM) is an integral part of corporate finance and has a direct impact on a company's liquidity and profitability. The study utilized panel data. Companies' data were analyzed utilizing proper statistical methods. The findings show that effective working capital influence a firm’s financial performance in Nigeria. The study concluded that management should create a strong and effective working capital management strategy that ensures maximum return, increases firm share value, and maximizes shareholders’ wealth. Keywords: Working Capital Management; Firms; Financial Performance; Liquidity; Inventory Penelitian ini menguji dampak manajemen modal kerja pada kinerja keuangan bisnis Nigeria. Manajemen modal kerja (WCM) merupakan bagian integral dari keuangan perusahaan dan memiliki dampak langsung pada likuiditas dan profitabilitas perusahaan. Penelitian ini menggunakan data panel. Data perusahaan dianalisis menggunakan metode statistik yang tepat. Temuan menunjukkan bahwa modal kerja yang efektif mempengaruhi kinerja keuangan perusahaan di Nigeria. Studi menyimpulkan bahwa manajemen harus menciptakan strategi manajemen modal kerja yang kuat dan efektif yang memastikan pengembalian maksimum, meningkatkan nilai saham perusahaan, dan memaksimalkan kekayaan pemegang saham. Kata Kunci: Manajemen Modal Kerja; Perusahaan; Kinerja Keuangan; Likuiditas; Persediaan

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Working Capital Management and Profitability: A Study of Selected listed manufacturing Companies in Nigerian Stock Exchange

Cited by 6 publications

References 2 publications

Empirical Study on the Impact of Account Receivables and Inventory Conversion Cycle on Profitability of Manufacturing Firms Listed on Ghana Stock Exchange

Empirical Study on the Impact of Account Receivables and Inventory Conversion Cycle on Profitability of Manufacturing Firms Listed on Ghana Stock Exchange

Liquidity and Profitability Ratios on Growth of Profits of Listed Oil and Gas Firms in Nigeria

Does Working Capital Management Drive Firm Financial Performance? Evidence from Developing Nation

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