Effect of Credit Management Policy on Financial Performance of Listed Consumer Goods Companies in Nigeria

Abstract

The study examines the effect of credit policy management on financial performance of listed consumer goods companies in Nigeria. The study adopted the ex post facto research design and used content analysis of corporate financial statements to extract relevant data from sampled firms for the period 2016 to 2019. The population of the study consisted of all listed consumer goods companies in Nigeria. Findings of the study indicate that cash conversion cycle has a negative but not significant association with financial performance. The study further revealed that average collection period has a positive and significant association with financial performance while debt equity ratio has a positive but insignificant relationship with financial performance. The study concludes that good credit management policy enhance financial performance of listed consumer goods companies in Nigeria and recommends that companies particularly the consumer goods companies should establish credit management policies that clearly outline the management’s view of organization priorities on profitability.

KEYWORDS: Credit Management, Cash Conversion Cycle, Average Collection Period, Debt Ratio, Financial Performance

DOI: 10.7176/RJFA/11-10-17

Publication date:May 31^st 2020