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Working Capital Management and the Performance of Consumer and Industrial Goods Sectors in Nigeria

ERIN, Olayinka and Okoye, Lawrence U. and Modebe, Nwanneka J. and Achugamonu, Bede U. and Ado, Ahmed (2017) Working Capital Management and the Performance of Consumer and Industrial Goods Sectors in Nigeria. POLAC JOURNAL OF CONTEMPORARY ACCOUNTING AND SECURITY STUDIES (JOCASS). pp. 179-192.

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The paper investigates the impact of working capital management on the performance of selected companies listed on the Nigerian Stock Exchange using panel data for forty (-IO)firms from the consumer and industrial goods sectors of the economy from 2006-20 15.Return on assets (ROA) was adopted as proxy for firm performance while cash conversion cycle (CCC). average payment period (APP),inventory conversion period (JCP), and average collection period (ACP) were adopted asproxies for working capital management. Estimation of the impact of the exogenous variables (cash conversion cycle, average payment period, inventory conversion period and average conversion period) on firm pe1jormance (endogenous variable) ·was based on the econometric techniques of the Ordinary Least Squares(OLS) and Generalized Least Square (GLS). Based on the OLS technique, the adjusted R2shows that 54% of variations in ROA were explained by the exogenous variables while the GLS shows that 62% of the variations were explained by the exogenous variables. These results imply that the exogenous variables significantly explain.firm pe1jormance in selected sectors. The regression results show evidence of sign(pc:ant positive impact (?laverage payment period and inventory conversion period on firm performance. There is also evidence of non significant negative impact of cash conversion (.yc/e on the performance of the selected firms. Parameter estimates were obtained at 5 per cent level of significance. Based on the above result, rhe study concludes that working capital management has significant impact on the performance of firms in 1 he consumer and industrial goods sectors of the Nigerian economy. Industry managers are therefore advised to devise efficient strategies for managing working capital so as to optimize its potentials.

Item Type: Article
Uncontrolled Keywords: Firm performance, Working capital management, Exogenous variable, Endogenous variable.
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HG Finance
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Mrs Patricia Nwokealisi
Date Deposited: 07 Mar 2018 08:40
Last Modified: 07 Mar 2018 08:40

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