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Working Capital Management and Financial Performance: Evidence from Nigeria’s Public Listed Manufacturing Companies

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  • Ibrahim Shuayb Kademi
  • Norhayati Alias
  • Noor Hasniza Haron
  • Raziah Bi Mohamed Sadique

Abstract

Working capital management is important in corporate finance and considerably impacts organizational profitability. The study investigates how working capital management impacts the performance (specifically in the context of financials) of publicly traded manufacturing companies listed on the Nigeria Stock Exchange (NSE). Data collected for this study was analyzed using Statistical Package for Social Sciences (SPSS) based on the sample of 18 manufacturing companies for five years from 2013 to 2017. Working capital management is important for all organizations as it can considerably impact profitability and financial performance. The linear regression study revealed a notable positive correlation between the Account Payable Period and profitability. An escalation in the duration of accounts payable is associated with increased profitability. The second regression model conclusion indicates that a reduction in the duration (days) to collect sales from consumers is linked to a reduction in the profit since accounts receivable are negatively and insignificantly correlated with profitability. The third discovery in this study revealed an insignificant adverse relationship between the conversion period for inventory and profitability. Manufacturing companies need to turn their inventory into sales to increase profits promptly. This analysis revealed an insignificant inverse correlation between the conversion cycle for cash and profitability.

Suggested Citation

  • Ibrahim Shuayb Kademi & Norhayati Alias & Noor Hasniza Haron & Raziah Bi Mohamed Sadique, 2024. "Working Capital Management and Financial Performance: Evidence from Nigeria’s Public Listed Manufacturing Companies," Accounting and Finance Research, Sciedu Press, vol. 13(2), pages 142-142, May.
    • Handle: RePEc:jfr:afr111:v:13:y:2024:i:2:p:142
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    References listed on IDEAS

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    1. Maad A. Q. Aldubhani & Jitian Wang & Tingting Gong & Ramzi Ali Maudhah, 2022. "Impact of working capital management on profitability: evidence from listed companies in Qatar," Journal of Money and Business, Emerald Group Publishing Limited, vol. 2(1), pages 70-81, March.
    2. Greg Filbeck & Thomas M. Krueger, 2005. "An Analysis of Working Capital Management Results Across Industries," American Journal of Business, Emerald Group Publishing Limited, vol. 20(2), pages 11-20, October.
    3. Muhammad Ahmad & Rabia Bashir & Hamid Waqas, 2022. "Working capital management and firm performance: are their effects same in covid 19 compared to financial crisis 2008?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2101224-210, December.
    4. Wang, Yung-Jang, 2002. "Liquidity management, operating performance, and corporate value: evidence from Japan and Taiwan," Journal of Multinational Financial Management, Elsevier, vol. 12(2), pages 159-169, April.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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