Working Capital Management and the Performance of Selected Quoted Manufacturing Companies in Nigeria (2000-2009)

Abstract

This study examined the working capital management and the performance of selected quoted manufacturing companies in Nigeria. The study specifically analyzed the effects of working capital management on the performance of manufacturing firms between the periods 2000 – 2009.

The study used secondary data sources which were collected from the Annual Report and Accounts of sixty purposively selected non-financial quoted companies in the Nigerian Stock Exchange Fact book. Data collected were analyzed using descriptive statistics such as mean, median, mode, standard deviation and inferential statistics such as correlation and regression analysis..

The results showed that the average collection period, the average payment period, were positively and significantly related to profitability; inventory turnover in days, cash conversion cycle were also significant but negatively related to profitability; the net trading cycle was negatively related to profitability but not significant. These implied that a reduction in the cash conversion cycle, inventory turnover in days and net trading cycle will generate more profits, while increase in average collection period, average payment period, will generate more profits and additional value for shareholders. The study concluded that efficient management of working capital affects the performance of manufacturing firms in Nigeria.

Keywords: Working capital management, descriptive statistics, inferential statistics, free cash flow, Manufacturing Sector.