WORKING CAPITAL MANAGEMENT AND FIRMS’ FINANCIAL PERFORMANCE: EVIDENCE FROM LISTED NIGERIAN FIRMS
Abstract
This study investigated the influence of Working Capital Management (WCM) on the financial performance of publicly listed companies in Nigeria. The analysis of secondary data from the period of 2012 to 2021 employed the utilization of cash conversion cycle, Account Receivable Management, and Account Payable Management metrics. The findings of the study indicate that there is statistically significant relationship between the cash conversion cycle and financial performance. The management of cash conversion cycle, accounts receivable and accounts payable showed a statistically significant impact on the financial performance of publicly traded companies in Nigeria. The study therefore suggests that firms should maintain an optimal level of working capital in order to maximize their overall value. Additionally, the effective management of cash flow is deemed to be of utmost importance for organizations while maintaining a balanced working capital management, with particular focus on managing account receivables, payables, and inventory. This is because efficient working capital management is anticipated to have a beneficial influence on the market value of firm.
Downloads
References
Adekola, A., Samy, M., & Knight, D. (2017). Efficient Working Capital Management as the tool for driving profitability and liquidity: a correlation analysis of Nigerian companies. International journal of Business and Globalization, 18(2), 251-275.
Bereprebofa, D.& Sinebe, M.T. (2022). Corporate performance effect on sustainability reporting of non-financial listed companies in Nigeria. Imo State University, Faculty of Business Administration, West African Journal of Business and Management Sciences, 11 (2) 157-167.
Gitman, L. J. (1974). Estimating corporate liquidity requirements: a simplified approach. Financial Review, 9(1), 79-88.
Ibrahim, M., & Dengel, B. Y. (2021). Cash Conversion Cycle and Value of Listed Oil and Gas Companies in Nigeria. Review of Market Integration, 13(1), 20-41.
Ibrahim, U. A., & Isiaka, A. (2021). Working Capital Management and financial performance of non-financial quoted companies in Nigeria. International Journal of Research in Business and Social Science (2147-4478), 10(3), 241-258.
Ironkwe, U., &Wokoma, D. (2017). Working Capital Management and firms’ financial performance of oil companies in Nigeria. IOSR Journal of Business and Management (IOSR-JBM), 19(1), 01-17.
Jeroh, E., Okolo, M.N., & Sinebe, M.T. (2022). Analysis of the Causal Relationship between Electronic Tax System, Tax Revenue and Economic Growth in Nigeria. Hmlyan Jr Eco Bus Mgn; 3(5), 35-46.
Kolapo, F. T., Oke, M. O., & Ajayi, L. B. (2015). Effect of Working Capital Management on corporate performance: Cross-sectional evidence from Nigeria. IOSR Journal of Business and Management (IOSR-JBM), 17(2), 93-103.
Olaniun, I., Jimoh, N., Shuaibu, H., & Ibrahim, Y. K. (2022). Tax Aggressiveness and Financial Performance of Listed Industrial Goods Firms in Nigeria. Gusau Journal of Accounting and Finance, 3(2), 16-16.
Okobo, M. M., Ugwoke, R. O., & Akpan, E. E. (2022). Investment in tangible non-current assets and financial performance of food manufacturing firms in Nigeria. Innovations, 19(3), 360-372.
Sani, A. B., Jibril, J., & Bakare, T. O. (2023). Examining the impact of working capital management on the financial performance of listed industrial goods entities in Nigeria. gusau journal of accounting and finance, 4(1), 151-170.
Simon, S., Sawandi, N., & Abdul-Hamid, M. A. (2018). A reassessment of the relationship between Working Capital Management and firm performance: evidence from non-financial companies in Nigeria. Investment management and financial innovations, 15 (3), 249-266.
Sinebe, M.T. (2020). Corporate Distress and Firm Management: A Conceptual Review. AFAR Multidisciplinary Journal of management Sciences (MJMS). 2 (2) 131-141
Sinebe, M.T. (2021). Retrospective Analysis on The Return on Asset, Firm Size (Fs) And Age of Firm on Capital Structure of Banks in Nigeria. Federal University, Otuoke, Quarterly Journal of Contemporary Research. 9 (2) 240-253.
Sinebe, M. T. &Efenudu, E.G. (2022). Impact Of Accounting Estimates on The Financial Performance of Some Listed Firms in Nigeria. Faculty of Humanities, Management and Social Sciences, Federal University Wukari, Journal of Finance, Governance and Strategic Studies (JOFGISS). 5 (1) 122-131.
Sinebe, M. T. & Henry, P. O. (2023). Evaluating Return on Investment as A Tool for Investment Decisions Making and Firm’s Performance. University Of Port Harcourt Business School, African Journal of Accounting, Finance and Marketing 7 (1) 96-106.
Umar, U. H., & Al-Faryan, M. A. S. (2023). The impact of working capital management on the profitability of listed halal food and beverage companies. Managerial Finance.
Umenzekwe, P. C., Okoye, E. I., &Aggreh, M. (2021). working capital management and financial performance: Evidence from selected Nigerian manufacturing firms. Journal of Contemporary Issues in Accounting, 2(1), 141-156.
Yakubu, A., Dangana, U., & Umaru, O. O. (2020). Working Capital Management and financial performance of selected quoted firms in Nigeria. International Journal of Research and Scientific Innovation (IJRSI), 7(4), 62-69.
Copyright (c) 2023 BEREPREBOFA, Dudutari, SINEBE, M.T., AKPOTU, JOY EGHONGHON
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Author(s) and co-author(s) jointly and severally represent and warrant that the Article is original with the author(s) and does not infringe any copyright or violate any other right of any third parties and that the Article has not been published elsewhere. Author(s) agree to the terms that the GPH Journal will have the full right to remove the published article on any misconduct found in the published article.
