Cost Structure and Financial Performance of Quoted Industrial Goods Manufacturing Companies in Nigeria

Abstract

Cost structure has considerably been a topical issue in the Manufacturing sector as it affects financial performance of the manufacturing companies and has not received reasonable attention in the accounting literature. The various components of cost structure were carefully assessed as independent variables and how they affected financial performance of the selected manufacturing companies. Return on Assets (ROA) was used to proxy financial performance of the companies. This paper aims at assessing the impact of cost structure on financial performance of quoted manufacturing companies in Nigeria. The study selects 7 industrial goods manufacturing companies listed by the Nigerian Exchange Group and the analysis was done using the financial statements for the period of 2011-2020. Ex-post facto research design and descriptive analysis through the use of regression and correlation analysis were used. The findings of the study confirm that there is a significant effect of cost structure on financial performance of selected manufacturing companies quoted by the Nigerian Exchange Group. The study recommended that cost structure should be well analysed into those components and the cost of each of the components should be investigated in order to manage and control the impact on the profitability of manufacturing companies.

Keywords

• cost components
• direct cost
• financial performance
• indirect cost
• industrial goods manufacturing companies
• variable costs