FINANCIAL RISK FACTORS AND FIRM PERFORMANCE: EVIDENCE FROM LISTED COMPANIES IN NIGERIA
Keywords:
Credit Risk, Financial Risk, Liquidity Risk, Operating Risk, Return on AssetsAbstract
This study determined the effect of financial risk factors on firm performance of listed agricultural firms in Nigeria, using liquidity risk, credit risk and operating risk as the independent variables, while return on assets was used to proxy firm performance. Ex Post Facto research design was employed. Data were extracted from the audited annual accounts of agricultural firms in Nigeria spanning from 2013 to 2024. Multiple regression analysis was employed to test the hypotheses. The study revealed that liquidity risk has a positive significant effect on firm performance of agricultural firms in Nigeria, while credit and operating risks have a negatively insignificant effect on firm performance of agricultural firms in Nigeria. This showed that liquidity risk is crucial for financial risk. Firm need to maintain optimal balance between current assets and current liabilities to ensure they meet short-term obligations and capitalize on opportunity for growth. Management should also consider diversifying funding sources to reduced liquidity risk.
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