WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF LISTED CONSUMER AND INDUSTRIAL GOODS COMPANIES IN NIGERIA

Abstract

Many businesses find it difficult to productively organize their working capital and this causes more trouble than expected because, without it, it is oftentimes difficult to successfully run these businesses and expect profitability, stability, and continuity. This study, therefore, considers the effect of Working Capital Management on the Profitability of Listed Consumer and Industrial Goods Companies in Nigeria. Data from the financial statements of the companies under investigation were used in the research. Generalized Least Square regression, variance inflation factor, multicollinearity, heteroskedasticity, and the Hausman specification test were used to analyze the data. It reveals that the inventory conversion time and working capital to revenue ratio have a significant outturn on their profit, however, the cash conversion period and current ratio have no impact on the profitability of listed consumer and industrial products companies in Nigeria, according to this study. It recommends that managers of consumer and industrial goods companies should adopt positive working capital policies and strategies aimed at enhancing the working capital structure by ensuring that the inventory conversion period is reduced to be the barest minimum for possible upward review of profitability. Thus, management must prioritize working capital management as it is currently viewed as a source of concern for many organizations.

Keywords

• working capital management
• consumer and industrial goods companies
• profitability
• return on assets