WORKING CAPITAL MANAGEMENT AND THE FINANCIAL PERFORMANCE OF LISTED OIL AND GAS COMPANIES IN NIGERIA

Abstract

Working capital is required for steering the day to day operations of an organization and hence its importance. This study examines the impact of working capital management on the financial performance of listed oil and gas firms in Nigeria. The study used secondary data only covering a period of 8 years (2011-2018). Correlational research design was used on a sample of 11 oil and gas firms. The study also employed the Robust Generalized Least Squares (GLS) multiple regression technique for data analysis, it concluded that cash conversion circle, and average period of debt settlement are negatively and strongly influencing return on asset of listed oil and gas firms in Nigeria, while average collection periods is positively influencing the return on asset of listed oil and gas firms in Nigeria. But average period of inventory retention has no statistical significant positive impact on the return on asset of listed oil and gas firms in Nigeria. The study therefore recommended that the management of oil and gas firms in Nigeria among others should consider reducing the cash conversion circle so as to increase their firm profitability. In addition, managers’ of oil and gas firms should encourage larger sales turnover and volume by allowing their customers’ shorter periods of account collections through granting of prompt sales cash discounts. The policy implication from the finding is that, management of listed oil and gas firms in Nigeria must embrace a more flexible trade credit policy from suppliers with elongated time to make payments for the profitability of their firms to improve.

Keywords

• Working Capital Management
• Return on Asset
• Oil and Gas Firms