Impact of Liquidity Management on Profitability of Selected Manufacturing Firms in Nigeria

Abstract

This study examined the impact of the liquidity management on the performance of the 10 (ten) manufacturing firms selected for the period of five years 2012-2016. Secondary data were collected from the annual reports and accounts of these firms. Descriptive statistics, correlation and regression analyses were used for data analysis. The study revealed that current ratio has negative and significant impact on profitability (ROA) of the selected firms while quick and cash ratios have positive but insignificant relationship with ROA. Therefore, it is recommended that attention should be purposely paid to Liquidity management in the manufacturing firms in Nigeria in order to enhance their profitability.

Keywords:  Liquidity, Profitability, Trade-off Theory, Return on Assets.

DOI: 10.7176/EJBM/12-27-11

Publication date:September 30^th 2020