INVENTORY MANAGEMENT PRACTICES AND PROFITABILITY OF SELECTED QUOTED FOOD AND BEVERAGE FIRMS IN NIGERIA

Abstract

This study examined the relationship between inventory management practices and financial 
performance among Nigeria's listed food and beverage companies, with particular emphasis on 
Flour Mills of Nigeria Plc and Nigeria Breweries Plc. The research specifically assesses the 
impact of inventory holding costs, ordering costs, and turnover rates on corporate profitability, 
measured through Return on Assets (ROA). The analysis utilizes seventeen years of secondary 
data (2008-2024) and employs a combination of descriptive statistics, correlation analysis, and 
panel regression techniques to evaluate these relationships. The methodological approach 
ensures robust examination of inventory management's financial implications within Nigeria's 
food and beverage sector. The results demonstrate that elevated inventory holding and ordering 
costs adversely affect profitability, while improved inventory turnover exerts a positive 
influence. These findings underscore that strategic inventory management characterized by 
enhanced turnover efficiency coupled with cost containment can substantially boost financial 
performance. The study contributes to existing literature by addressing sector-specific 
knowledge gaps and provides actionable insights for industry practitioners and policymakers, 
recommending investments in modern inventory systems, workforce training, and turnover 
optimization strategies to maximize profitability.