LIQUIDITY MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE OF LISTED CONSUMER GOODS FIRMS IN NIGERIA
Keywords:
Cash Ratio, Current Ratio, Financial Performance, Liquidity Management Practices, Quick RatioAbstract
The broad objective of this study was to examine the effect of liquidity management on financial performance of listed consumer goods firms in Nigeria, with specific emphasis on liquidity management proxies to include cash ratio, quick ratio, current ratio, and cash conversion cycle as they influence firm financial performance measured as Tobin Q ratio. This study is anchored on the Liquidity Trade-Off Theory, which highlights the balance firms must strike between maintaining sufficient liquidity and optimizing asset utilization to maximize returns. Utilizing both descriptive and ex-post facto research designs, this study investigates historical accounting data collated from eighteen consumer goods firms listed on the Nigerian Exchange Group over the 2015 to 2024 period. The firms were selected using purposive non-probability sampling on the bases that sampled consumer goods firms have filed their annual financials for the period under review. Further, this study employed quantile regression analysis to capture the heterogeneous effects of liquidity management practices of firms across different financial performance levels. Findings indicate that cash ratio has a significant negative effect on financial performance for consumer goods firms at the upper quantile of financial performance, while quick ratio and current ratio show a significant positive effect on high-performing consumer goods firms. Conversely, cash conversion cycle demonstrates a negative impact on firm financial performance for consumer goods firms lying at the upper quantile of performance distribution. Conclusively, this study highlights the critical role of liquidity management in enhancing firm value, particularly for high-performing firms in the consumer goods sector. Therefore, it is recommended that firms maintain balanced cash reserves while avoiding excessive liquidity that could signal inefficiencies. Consumer goods firms should also optimize current ratio and cash conversion cycle to enhance cash flow and financial performance industry
Downloads
Published
Issue
Section
License
Copyright (c) 2025 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.
