Effect of Cash Conversion Cycle and Inventory Holding Period on the Profitability of Small and Medium Enterprises in Wote, Makueni County (Published)
This study examined influence of working capital management practices on the profitability of small and medium sized enterprises in Makueni County. A cross-sectional survey research design was used. A sample of 50 small and medium sized enterprises from Wote town was used. The financial statements for 2012-2016 were used to generate secondary data while semi-structured questionnaires were used for primary data collection. Descriptive statistics of frequency, means and standard deviation were used while the results were presented in tables. The study aimed at finding out the relationship between profits of the small and medium enterprises and inventory turnover, receivables, cash management and payables. The findings indicated that there exist a positive but not significant relationship between cash conversion cycle and profitability, while inventory-holding period has a positive and significant effect on profitability. The study recommends an improvement on the cash conversion cycle and use of the findings for developing policies for improvement since small and medium enterprises are key contributors to the Gross Domestic Product of the country.
Keywords: Cash conversion cycle, Small and Medium Enterprises, Working Capital Management
IMPACT OF WORKING CAPITAL ON THE PROFITABILITY OF THE NIGERIAN CEMENT INDUSTRY (Published)
This study empirically examined the impact of working capital management (Measured by: the number of days accounts receivable are outstanding-DAR, the number of days inventory are held-DINV, and the cash conversion cycle-CCC), on profitability (measured by return on assets-ROA) of Nigerian Cement Industry for a period of eight (8) years (2002-2009). Data from a sample of four (4) out of the five (5) cement companies quoted on the Nigerian Stock Exchange (NSE) were analysed using descriptive statistics and multiple regression analysis. The study found an insignificant negative relationship between the profitability (measured by ROA) of cement companies quoted on the NSE and the number of days accounts receivable are outstanding (DAR). The study also found a significant negative relationship between the profitability of these cement companies and the number of days inventory are held (DINV). The study finally revealed a significant positive relationship between the profitability and the cash conversion cycle (CCC). The study concludes that, the profitability of cement companies quoted on the NSE during the study period is influenced by DINV and CCC. The study therefore recommends that managers of these cement companies should manage their working capital in more efficient ways by reducing the number of days inventory are held to an optimal level in order to enhance their profitability as well as create value for their shareholders. Managers of Nigerian cement companies should also improve on their cash flows, through the reduction of their cash conversion cycle
Keywords: Accounts receivable, Cash conversion cycle, Inventory., Nigerian Cement Industry, Profitability, Working Capital Management
WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF SELECTED QUOTED FOOD AND BEVERAGES MANUFACTURING FIRMS IN NIGERIA (Published)
The main objective of this research was to investigate the relationship between working capital management and profitability of food and beverages manufacturing firms listed on the Nigerian Stock Exchange. The study used secondary data of 120 firm-year observationsbetween 2002 and 2011. Survey research design was adopted. The data were analysed using Descriptive Statistics, Correlation Analysis and Multiple Regression Analysis.The variables for this study were categorized into three: Dependent variables (Net Operating Profit), independent variables (Working Capital Management), and control variables. The study found that there is relatively strong positive and significant relationship between Working Capital management and Net Operating Profit and that a positive but insignificant relationship exist between Cash Conversion Cycle and Net Operating Profit. Also, Account Collection Period has significant negative relationship with Net Operating Profit while Inventory conversion Period and Account payment period have insignificant negative relationship with Net operating profit of food and beverages manufacturing companies in Nigeria
Keywords: Cash conversion cycle, Correlation Analysis, Net Operating Profit, Quoted Food and Beverages Firms, Working Capital Management
Impact of working capital on the profitability of the Nigerian cement industry (Review Completed - Accepted)
This study empirically examined the impact of working capital management (Measured by: the number of days accounts receivable are outstanding-DAR, the number of days inventory are held-DINV, and the cash conversion cycle-CCC), on profitability (measured by return on assets-ROA) of Nigerian Cement Industry for a period of eight (8) years (2002-2009). Data from a sample of four (4) out of the five (5) cement companies quoted on the Nigerian Stock Exchange (NSE) were analysed using descriptive statistics and multiple regression analysis. The study found an insignificant negative relationship between the profitability (measured by ROA) of cement companies quoted on the NSE and the number of days accounts receivable are outstanding (DAR). The study also found a significant negative relationship between the profitability of these cement companies and the number of days inventory are held (DINV). The study finally revealed a significant positive relationship between the profitability and the cash conversion cycle (CCC). The study concludes that, the profitability of cement companies quoted on the NSE during the study period is influenced by DINV and CCC. The study therefore recommends that managers of these cement companies should manage their working capital in more efficient ways by reducing the number of days inventory are held to an optimal level in order to enhance their profitability as well as create value for their shareholders. Managers of Nigerian cement companies should also improve on their cash flows, through the reduction of their cash conversion cycle
Keywords: Accounts receivable, Cash conversion cycle, Inventory., Nigerian Cement Industry, Profitability, Working Capital Management