Working Capital Management and Profitability of Quoted Manufacturing Firms in Nigeria.

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         ABSTRACT

This study examined the impact of working capital management and profitability of 10 quoted manufacturing companies in Nigeria using a cross-sectional time series data for the period 2010 – 2015. The study used secondary data generated from the published annual reports and account of the sampled companies. Data were analysed using correlation and descriptive statistics using SPSS 20. The study reviewed a positive effect of cash conversion cycle (CCC), receivable collection period (RCP), and a negative effect of inventory conversion period (ICP), payables payment period (PPP), on return on assets (a mirror of firms profitability). It was found that cash conversion cycle (CCC) with a positive sign is the most significant precision variable in influencing profitability and liquidity in Nigeria. The study therefore recommended (i) that the firms should promptly collect cash from credit sales, (ii) that excess cash should be reinvested in short-term securities (assets) to generate profits (iii) that since there exists high sales turnover in the Nigeria emerging markets, government policy should target multinational companies (MNCs) for invitation to participate in investing in Nigeria by creating the right legal and regulatory framework to enable them the market for possible FDI, IPI, and FPI injection into the Nigeria domestic economy.

KEYWORDS: working capital, liquidity, profitability, cash management

TABLE OF CONTENTS
Title pagei
Certification ii
Dedication         iii
Acknowledgement.              iv
Abstract         v
Table of Contents vi
List of Tables ix
CHAPTER ONE
INTRODUCTION 1
1.1Background information to the study1-3
1.2Statement of the problem                                                   4-5
1.3Significance/justification of the study                5-7
1.4Objectives of Study7-8
1.5Scope of the Study       8
1.6Research Questions 9
1.7Research Hypotheses 9
1.8Limitation to the study 10
1.9Operational Definition of             Terms      10-12
1.10Case Study/Historical Background      12-14

CHAPTER TWO
LITERATURE REVIEW  15
2.1Conceptual Framework 15
2.1.1  Concept of Working                       Capital      16-18
2.1.2. Significance Component            of Working Capital                         Management      18-19
2.1.2.1Inventory.                Management and Profitability      20-22
2.1.2.2Account Receivables Management and Profitability22-27
2.1.2.3Account Payables Management and Profitability27-29
2.1.2.4Cash Management    .      and Profitability29-31
2.1.2.5Cash Conversion Cycle and Profitability31-33
2.1.3Measurement of Working Capital Management        33-35
2.1.4Working Capital Policy35-38
2.1.4.1Investing in Working              Capital 38
2.1.4.2Short term Financing39
2.1.5Concept of            Profitability     39-40
2.1.6Profitability and Liquidity Measures      40-43
2.1.7Working Capital Management and Firm Profitability      43-44
2.1.8Consequences of Poor Working Capital Management                     44-45
2.2 Theoretical Framework     45-46
2.2.1Risk and Return Tradeoff Theory    46-47
2.2.2Resource-Based            Theory    47-48
2.3 Empirical Studies     48-51
CHAPTER THREE
3.0METHODOLOGY52
3.1Research Design     52-53
3.2Population53
3.3Sample and sampling            Techniques53
3.4Method of Data Collection54
3.5Reliability and Validity Tests    54-55
3.6Method of Data Analysis55-56
CHAPTER FOUR
4.0RESULTS AND DISCUSSION57
4.1Presentation of Results    58-61
4.2Discussion of Results    61-63
4.3Interpretation of Results     63-65
CHAPTER FIVE
5.0 CONCLUSION AND RECOMMENDATIONS66
5.1Conclusion66
5.2Recommendations. 66-67
References     68-73
Appendices

LIST OF TABLES
Table 1Descriptive Statistics for the Model58
Table 2Correlation Analysis of Model     58-59
Table 3Regression Model Summary60
Table 4ANOVA Test of Analysis of Variance60
Table 5 Coefficient of Determination61

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