Working Capital Management and Profitability of Quoted Manufacturing Firms in Nigeria.

         ABSTRACT

This study examined the impact of working capital management and profitability of 10 quoted manufacturing companies in Nigeria using a cross-sectional time series data for the period 2010 – 2015. The study used secondary data generated from the published annual reports and account of the sampled companies. Data were analysed using correlation and descriptive statistics using SPSS 20. The study reviewed a positive effect of cash conversion cycle (CCC), receivable collection period (RCP), and a negative effect of inventory conversion period (ICP), payables payment period (PPP), on return on assets (a mirror of firms profitability). It was found that cash conversion cycle (CCC) with a positive sign is the most significant precision variable in influencing profitability and liquidity in Nigeria. The study therefore recommended (i) that the firms should promptly collect cash from credit sales, (ii) that excess cash should be reinvested in short-term securities (assets) to generate profits (iii) that since there exists high sales turnover in the Nigeria emerging markets, government policy should target multinational companies (MNCs) for invitation to participate in investing in Nigeria by creating the right legal and regulatory framework to enable them the market for possible FDI, IPI, and FPI injection into the Nigeria domestic economy.

KEYWORDS: working capital, liquidity, profitability, cash management

TABLE OF CONTENTSTitle pageiCertification iiDedication         iiiAcknowledgement.              ivAbstract         vTable of Contents viList of Tables ixCHAPTER ONEINTRODUCTION 11.1Background information to the study1-31.2Statement of the problem                                                   4-51.3Significance/justification of the study                5-71.4Objectives of Study7-81.5Scope of the Study       81.6Research Questions 91.7Research Hypotheses 91.8Limitation to the study 101.9Operational Definition of             Terms      10-121.10Case Study/Historical Background      12-14
CHAPTER TWOLITERATURE REVIEW  152.1Conceptual Framework 152.1.1  Concept of Working                       Capital      16-182.1.2. Significance Component            of Working Capital                         Management      18-192.1.2.1Inventory.                Management and Profitability      20-222.1.2.2Account Receivables Management and Profitability22-272.1.2.3Account Payables Management and Profitability27-292.1.2.4Cash Management    .      and Profitability29-312.1.2.5Cash Conversion Cycle and Profitability31-332.1.3Measurement of Working Capital Management        33-352.1.4Working Capital Policy35-382.1.4.1Investing in Working              Capital 382.1.4.2Short term Financing392.1.5Concept of            Profitability     39-402.1.6Profitability and Liquidity Measures      40-432.1.7Working Capital Management and Firm Profitability      43-442.1.8Consequences of Poor Working Capital Management                     44-452.2 Theoretical Framework     45-462.2.1Risk and Return Tradeoff Theory    46-472.2.2Resource-Based            Theory    47-482.3 Empirical Studies     48-51CHAPTER THREE3.0METHODOLOGY523.1Research Design     52-533.2Population533.3Sample and sampling            Techniques533.4Method of Data Collection543.5Reliability and Validity Tests    54-553.6Method of Data Analysis55-56CHAPTER FOUR4.0RESULTS AND DISCUSSION574.1Presentation of Results    58-614.2Discussion of Results    61-634.3Interpretation of Results     63-65CHAPTER FIVE5.0 CONCLUSION AND RECOMMENDATIONS665.1Conclusion665.2Recommendations. 66-67References     68-73Appendices
LIST OF TABLESTable 1Descriptive Statistics for the Model58Table 2Correlation Analysis of Model     58-59Table 3Regression Model Summary60Table 4ANOVA Test of Analysis of Variance60Table 5 Coefficient of Determination61