Working Capital Management and Performance of Selected Firms Quoted on Nigeria Stock Exchange
Abstract
Abstract
Objectives: The continuous existence and performance of a firm depends on the efficiency of its working capital. This paper therefore examined the effect of working capital management on firm performance
Prior Work: This work focused on healthcare and consumer goods sector which has not been adequately researched on by past literatures.
Approach: Ten companies from the health and food and beverages sectors listed on NSE were selected. Secondary data were used and obtained from the annual financial reports of the selected companies from 2012– 2019. Panel data analysis and Haussmann tests were used to examine the effect of working capital management on firm performance.
Results: Findings revealed that average collection period has positive significant effects on firm performance while firm size has negative but significant effect on firm performance. The study concludes that firms would be adversely affected if it takes them longer period to retrieve payments due from their customers.
Implications: This study used a few of the determinants of performance. There are other determinants of performance that can be used by other studies.
Value: This study shed more light on the issue of working capital and firm performance, especially on sectors that have not been adequately researched on.
Keywords: Working capital management, firms' performance, firm's growth, firm profitability
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