| Summary, etc |
Working capital management is one of the most vital areas while making the profitability<br/>comparison among firms and involves the decision of the amount and composition of current assets<br/>and the financing of this assets. Working capital management is necessary because of its effect on<br/>profitability and risk and also determines the running of the business firm, and consequently, its<br/>value and long term survival of the firm. The success of these companies depend largely on proper<br/>financing and management of working capital. Many consumer goods firms are facing problems<br/>with their collection and payment procedures, strategy and policies as well as not paying attention<br/>to inventory basis. These have negatively affected profitability of the firms and in turn have<br/>affected the value of the companies. This study examined the relationship between working capital<br/>management and profitability of selected consumer goods firms in Nigeria.<br/>The objectives of this study is to evaluate and examine the relationship between net working<br/>capital, debtors collection period, creditors payment period, and inventory conversion period on<br/>the profitability of firms in consumer goods sector in Nigeria.<br/>This research study adopts descriptive research design and ex-post factor research design. The<br/>population of the study comprised the 25 consumer goods firms listed at the Nigerian Stock<br/>Exchange, as at December 2017. Purposive and convenience sampling technique were used to<br/>select 19 companies out of 25 quoted companies in the industry which have complete data till at<br/>least 2017 in the Nigerian Stock Exchange Fact Book. Time series were extracted using secondary<br/>source from the published financial statements of the firms and Nigerian Stock Exchange from<br/>2013- 2017. Data were examined and analyzed quantitatively using descriptive and inferential<br/>statistics.<br/>Findings revealed that net working capital had positively and no significant effect on the return<br/>on assets of selected consumer goods sector in Nigeria(R<br/>2 = 6%; Adj R- sq= -5%; and F- stat<br/>=.5.32, p<.05) . Debtor’s collection period has positively and non-significant effect on return on<br/>asset of selected consumer goods sector in Nigeria (R<br/>2 =3%; Adj R –sq= -7%; and F-stat=3.09,<br/>p<.05). Creditors payment period also influenced return on assets of selected consumer goods<br/>sector in Nigeria (R<br/>2 = 1%; Adj R- sq = -2%; and F-stat = 8.36, , p<.05). Inventory conversion<br/>period influenced return on assets of selected consumer goods sector in Nigeria (R<br/>2 =9%; Adj Rsq = -10%;and F-stat =0.095, , p<.05).<br/>The study concluded that working capital management have no significant influence on<br/>profitability of consumer goods sector in Nigeria. It was recommended that management of<br/>selected consumer goods firms should pay close attention and focus to sound management of their<br/>working capital management components as they influenced their profitability.<br/>Keywords: Creditors payment period, debtor’s collection period, inventory conversion period, net<br/> working capital, and profitability |
