EFFECTS ANALYSIS OF MEASURES OF WORKING CAPITAL MANAGEMENT ON FINANCIAL PERFORMANCE OF NON-FINANCIAL FIRMS LISTED IN NIGERIA
Keywords:
Average collection period, Inventory Conversion period, Return on Assets, Return on EquityAbstract
To make the most profitable use of every business’ scarce resources and for such organization to actualize the defined goal(s) of its existence, the place of working capital management (WCM) is considered paramount to its continuity and non-exposure to insolvency that often lead to its untimely cessation from business due to the mismanagement of the business’ Current Assets and Current Liabilities. Thus, this study analyzed the effect of various measures of working capital management on financial performance of non-financial firms listed on the Nigerian Exchange Group for the period, 2008-2022. The WCM measures used were average collection period and inventory conversion period. As a result, the ex-post facto research design was adopted, with secondary data obtained from annual reports of the sixteen (16) selected non-financial firms. With the aid of Feasible generalized least squares (FGLS) regression analysis, the hypotheses were subjected to test and it was discovered that Average collection period had a significant effect on Return on Assets while Inventory conversion period had an insignificant effect on Return on Assets. Also, Inventory conversion period and Average collection period had a significant effect on Return on Equity. In conclusion, given the advancement of technology with its components of cashless policy, internet advertisement and trading, firms with a good rationing technique and dynamic credit policy that is consistent with reoccurring changes in the competitive domestic and international market can readily benefit from steady increase in Return on Assets and Return on Equity, regardless of the attendant increase in Average collection period and Inventory conversion period from time to time. The study therefore recommends that firms should make the most use of technology and all its facets for business operations and growth purpose so as to adequately serve customers and also maintain adequate liquidity by maintaining a strong customer base.
Downloads
Published
Issue
Section
License
Copyright (c) 2023 Journal of Global Accounting
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Articles submitted to JOGA should not have been published or are currently under review by another Journal. Kindly see the guide for the preparation of the manuscript for details. Successful submission of articles by author(s) for publication clearly implies that the work is not an infringement of any existing copyright warranty as JOGA reserves the right to be indemnified by the author(s) where any breach of such warranty is proven. For ease of dissemination and to ensure proper policing of use, papers and contributions become the legal copyright of JOGA once published unless otherwise agreed.
Permission clearance should be obtained by the author(s) where applicable for the use of any content of interest not originally created by them. This must be done before the submission of the article to JOGA. Failure to do so may lead to a lengthy delay in publication, as JOGA is unable to publish any article which has permissions pending. Thus, the rights JOGA requires are:
- Non-exclusive right to reproduce the material in the article or book chapters.
- Print and electronic rights.
- To use the material for the life of the work (for instance, there should be no time restrictions on the re-use of material).
Where tables, figures or excerpts of more than 250 words are reproduced from another source, it is expected that:
- Author(s) should obtain the necessary written permission in advance from any third-party owner of the copyright for the use in print and electronic formats of any of their text, illustrations, graphics, or other material in their manuscript. Permission must also be cleared for any minor adaptations of any work not originally created by the author(s). The author (s) should not assume that any content freely available on the web is free to use.
- Where the author adapts a significant number of any material, the author(s) must inform the copyright holder of the original work.
- Author obtains any proof of consent statements
- The author must acknowledge figure(s) and content adopted or adapted in work utilizing source(s) and further capture them in the list of references.
