Working Capital Management and Profitability of Consumer Goods Companies in Nigeria (Published)
This study investigates the impact of working capital management (WCM) on the profitability of consumer goods companies in Nigeria. Using a quantitative research design, panel data from five selected companies over a five-year period (2019–2023) were analyzed. Key working capital metrics, including Accounts Receivable Period (ARP), Accounts Payable Period (APP), and Inventory Turnover, were examined alongside profitability measured by Return on Assets (ROA). A Fixed Effects regression model was employed to evaluate the relationship between WCM components and profitability, while diagnostic tests ensured the robustness of the results. Findings reveal that ARP and APP have statistically insignificant impacts on ROA, suggesting that receivables and payables management practices may not significantly influence profitability. Similarly, Inventory Turnover showed no robust relationship with profitability, highlighting the complexity of WCM in driving financial performance. Control variables such as firm size and leverage were marginally significant, suggesting their potential role in profitability. The study concludes that while effective WCM practices are essential for operational efficiency, their impact on profitability may depend on firm-specific and industry-specific factors. Recommendations include optimizing inventory management, streamlining receivables and payables cycles, and tailoring WCM strategies to the unique challenges of Nigeria’s consumer goods sector.
Keywords: Accounts Payable Period (APP), Accounts Receivable Period (ARP), Return on Assets (ROA), inventory turnover