Working Capital Management and Firm Profitability: Evidence from Nigerian Quoted Companies

Abstract

This study examines the relationship between working capital management and firms’ profitability of twenty-five Nigerian quoted companies for the seven-year period 2005-2011. Data used in the study were sourced from audited financial statements of the companies. Multiple Regression analysis was used to analyze the data and results showed a negative relationship between working capital management (Cash Conversion Cycle) and firm profitability (ROA). This finding is consistent with prior empirical studies and provides evidence in support of aggressive policy of working capital management.

Keywords: Working Capital Management, Cash Conversion Cycle, ROA, Nigeria.