IMPACT OF WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF LISTED CONSUMER GOODS COMPANIES IN NIGERIA (2019-2024)

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ABSTRACT
This study investigates the impact of working capital management (WCM) on the profitability of selected listed consumer goods companies in Nigeria between 2019 and 2024. Efficient management of working capital components such as inventory, accounts receivable, accounts payable, and the cash conversion cycle (CCC) is essential for ensuring liquidity and long-term financial sustainability, particularly in the highly competitive and volatile consumer goods sector.

The study employs a panel data methodology, analyzing the financial performance of ten consumer goods companies listed on the Nigerian Exchange Group (NGX). Data were sourced from publicly available audited annual reports and financial disclosures. Descriptive statistics, Pearson correlation, and fixed effects regression models were used to evaluate the relationship between key working capital indicators-inventory turnover, receivables collection period, payables deferral period, and CCC-and profitability indicators measured by return on assets (ROA) and return on equity (ROE).

The results reveal that inventory turnover and payables deferral period have a statistically significant positive relationship with profitability, while receivables collection period and cash conversion cycle exhibit significant negative effects. The findings underscore that efficient WCM enhances firm performance, whereas delays in receivables and long cash cycles hinder profitability. The Hausman test confirmed the fixed effects model as the most appropriate for the analysis.

The study concludes that effective working capital policies are crucial for improving financial performance in Nigeria's consumer goods sector. It recommends that companies adopt strategic receivables management, optimize inventory systems, and leverage payables to maintain liquidity and profitability. The study contributes to empirical literature by providing recent post-pandemic insights into WCM practices in emerging markets and offers practical recommendations for finance managers, investors, and policymakers.

TABLE OF CONTENTS

TITLE: 1

ABSTRACT 2

CHAPTER ONE 5

INTRODUCTION 5

1.1 Background to the Study 5

1.2 Statement of the Problem 7

1.3 Objectives of the Study 8

1.4 Research Questions 9

1.5 Research Hypotheses 9

1.6 Significance of the Study 10

1.7 Scope of the Study 11

1.8 Limitations of the Study 11

1.9 Organization of the Study 12

CHAPTER TWO 13

LITERATURE REVIEW 13

2.1 Introduction 13

2.2 Conceptual Clarifications 14

2.2.1 Working Capital Management (WCM) 14

2.2.2 Profitability 16

2.2.3 Cash Conversion Cycle (CCC) 19

2.3 Theoretical Review 22

2.3.1 Transaction Cost Theory 22

2.3.2 Liquidity-Profitability Trade-Off Theory 24

2.3.3 Resource-Based View (RBV) 27

2.4 Empirical Review 29

2.4.1 Global Evidence 29

2.4.2 Evidence from Nigeria 32

2.4.3 Post-COVID Insights 35

2.5 Key Variables and Measurement 38

2.6 Research Gap 38

2.7 Summary of Reviewed Literature 41

CHAPTER THREE 45

RESEARCH METHODOLOGY 45

3.1 Introduction 45

3.2 Research Design 45

3.3 Population and Sample Size 46

3.3.1 Population of the Study 46

3.3.2 Sample Selection 46

3.4 Sources and Methods of Data Collection 47

3.5 Method of Data Analysis 48

3.6 Definition and Measurement of Variables 48

3.6.1 Dependent Variables (Profitability Metrics) 48

3.6.2 Independent Variables (Working Capital Indicators) 49

3.7 Model Specification 49

3.8 Justification for Methodological Choices 50

3.9 Ethical Considerations 50

3.10 Chapter Summary 50

CHAPTER FOUR 52

DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS 52

4.1 Introduction 52

4.2 Data Presentation 52

4.2.1 Descriptive Statistics 52

4.3 Correlation Matrix 59

4.4 Panel Regression Analysis 60

4.4.1 Regression Models 60

4.4.2 Fixed Effects Results 60

4.5 Hausman Test 61

4.6 Discussion of Findings 61

4.7 Summary 62

4.8 Data Sources (Company Annual Reports) 63

CHAPTER FIVE 66

SUMMARY, CONCLUSION AND RECOMMENDATIONS 66

5.1 Summary of Findings 66

5.2 Conclusion 67

5.3 Recommendations 68

1. Improve Receivables Collection Efficiency: 68

2. Optimize Inventory Management: 68

3. Strategically Extend Payables Period: 69

4. Monitor and Shorten the Cash Conversion Cycle: 69

5. Adopt Data-Driven Financial Decision-Making: 69

5.4 Contribution to Knowledge 69

5.5 Suggestions for Further Research 70

REFERENCES 72

📄 Pages: 88 🧠 Words: 10158 📚 Chapters: 5 🗂️️ For: PROJECT

👁️‍🗨️️️ Views: 215

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