Working capital management and profitability of listed manufacturing companies in selected African countries

There is a need for manufacturing companies to monitor their working capital for the purpose of ensuring continuity. This study examined the effect of working capital management on the profitability of listed manufacturing companies in selected African countries from 2014 to 2019. The selected countries are Botswana, Ghana, Kenya, Nigeria, South Africa and Zambia. The criteria for selecting these countries were that they must have a functional stock exchange and be a member of the Commonwealth of nations for the sample period. The data were extracted from the respective countries’ stock exchanges from 2014 to 2019 and were analyzed using descriptive statistics (to compare performance across countries), a panel unit test, and the panel fully modified least squares method. The findings show that net profit ratio (NPR) varies across the countries based on different practices. The study also discovered that the account receivables period and cash conversion cycle have a positive and significant relationship with financial profitability. Account payment period and inventory management have a positive and insignificant relationship with profitability. The study recommends that emphasis should be placed on the components of working capital policy to ensure survival of the company because of its impact on profitability.