Working Capital Management and Firms' Profitability (A Study of Selected Consumer Goods Manufacturing Companies in Nigeria)



Working capital, inventory, cash conversion cycle, inventory conversion cycle, average payment period



The importance of working capital management cannot be overstated since ineffectiveness leads to corporate bankruptcies all over the world. The purpose of the research was to see how working capital management affects the profitability of companies in Nigeria's consumer goods manufacturing sector. For a period of six years, relevant secondary data was collected from published annual reports of the 16 publicly traded firms under investigation between 2014-2019. The analysis approach used in this study was the panel least square regression model, which was combined with the Pearson's correlation model. The findings of the research demonstrate that the cash conversion cycle (CCC) has no effect on profitability. The study also discovered that inventory conversion cycle (ICC) and profitability have a negative and significant association, whereas average payment period (APP) and profitability have a negative and insignificant connection. Managers should pay close attention to the working capital components, as shown by this study, to eliminate inefficiency and guarantee optimal levels.

Author Biographies

Vanessa Onyinyechukwu Mache, Covenant University Ota

Department of Accounting, College of Management and Social Sciences




Agha, H. (2014). Impact of working capital management on profitability. European Scientific Journal, 10(1), 374-381. Retrieved from
Akhtar, I. (2016). Research Design. Research in Social Science: Interdisciplinary Perspectives, 68-84. Retrieved from
Alvarez, S. A., & Busenitzs, L. W. (2001). The entrepreneurship of resource-based theory. Journal of Management, 27(6), 755-775. doi:
Anichebe, N. A., & Agu, O. A. (2013). Effect of inventory management on organizational effectiveness, 3(8). Information and Knowledge Management, 92-100.
Dwommor, J. Y., & Nasiru, I. (2017). Do firms manage working capital for survival or for success: An empirical evidence from literature review? The International Journal of Business & Management, 5(4), 173-183.
Golas, Z. (2020). Impact of working capital management on business profitability: Evidence from the polish dairy industry. Agricultural Economics - Czech, 66(6), 278-285.
Jakpar, S., Tinggi, M., Siang, T. K., Johari, A., Myint, K. T., & Sadique, M. S. (2017). Working Capital Management and Profitability: Evidence from Manufacturing Sector in Malaysia. Journal of Business and Fianacial Affairs, 6(2), 1-9.
Khalid, R., Saif, T., Gondal, A. R., & Sarfraz, H. (2018). Working capital management and profitability. Mediterranean Journal of Basic and Applied Sciences (MJBAS), 2(2), 117-125.
Kosgey, T., & Njiru, A. (2016). Influence of working capital management on the financial performance of small enterprises; A survey of Nakuru County. Journal of Business and Management, 81(4), 41-47.
Lammers, W., & Badia, P. (2005). Fundamentals of Behavioural Research. Australia ; Belmont: Ca: Thomson/Wadsworth.
Mbella, M. E., & Ngongang, Y. N. (2018). The effect of working capital management on the profitability of limited liability companies in cameroon: case of eneo cameroon S.A. Global Journal of Management and Business Research: B Economics and Commerce, 18(6).
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48, 261-297.
Oladimeji, J. A., & Aladejebi, O. (2020). The Impact of Working Capital Management on Profitability: Evidence from Selected Small Businesses in Nigeria. Journal of Small Business and Entrepreneurship Development, 8(1), 27-40.
Olaoye, F. O., Adekanbi, J. A., & Oluwadare, O. E. (2019). Working Capital Management and Firms’ Profitability: Evidence from Quoted Firms on the Nigerian Stock Exchange. Intelligent Information Management, 11, 43-60.
Otekunrin, A. O., Nwanji, T. I., Fagboro, G. D., Olowookere, J. K., & Adenike, O. (2021). Does working capital management impact an enterprise’s profitability? Evidence from selected Nigerian firms. Problems and Perspectives in Management, 19(1), 477-486. doi:10.21511/ppm.19(1).2021.40
Pandey, I. M. (2008). Financial Management, tenth edition. New Delhi: Vikas PublishingHousePvt.Limited.
Phuong, N. T., & Hung, D. N. (2019). Impact of working capital management on firm profitability: Empirical study in Vietnam. Accounting, 6, 259-266.
Raheman, A., & Nasr, M. (2007). Working Capital Management and Profitability-Case of Pakistani Firms. International Review of Business Papers 3, pp. 279-300.
Singh, H. P., Kumar, S., & Colombage, S. (2017). Working capital management and firm profitability: a meta-analysis. Qualitative Research in Financial Markets, 9(1), 34-47.
Song, X., Yang, X., & Yu, K. (2020). How do supply chain network and SMEs’ operational capabilities enhance working capital financing? An integrative signaling view. International Journal of Production Economics, 220. doi:
Uguru, L. C., Chukwu, U. C., & Elom, J. O. (2018). Effect of Working Capital Management on the Profitability of Brewery Firms in Nigeria. Journal of Economics and Finance, 9(2), 9-20.
Wassie, F. A. (2021). Working capital management and its impact on firms’ performance: An empirical analysis on Ethopian exporters. Hindawi Education Research International, 1-10. doi:






Financial Economics