Effect of Short-Term Financial Obligations on Profitability of Oil and Gas Firms in Nigeria (Published)
This study investigates the effect of short-term financial obligations on the profitability of oil and gas firms in Nigeria. It specifically looks at how short-term loans and accounts payable affect profit for the year (PFY). The study uses panel data from the annual reports of selected oil and gas companies and employs an ex post facto design. The hypotheses were evaluated using multiple regression analysis, which relied on t-statistics and p-values to determine the significance of the effects and coefficient signs to understand the direction of the association. The results show that accounts payable significantly boost profitability, suggesting that effective payables management can improve financial performance by enhancing cash flow management. However, short-term loans have a marginally significant negative impact, indicating that their costs may reduce profitability despite providing instant liquidity. With an adjusted R-squared of 54%, the study suggests that current liabilities have a considerable impact on the financial performance of Nigerian oil and gas companies. In order to reduce costs, it recommends strengthening payables management and carefully evaluating short-term financing options. The information provided is essential for improving financial management practices in the industry.
Keywords: Financial Performance, Nigeria, accounts payable, current liabilities, oil and gas firms, profit for the year (PFY), short-term financial obligations, short-term loans