WORKING CAPITAL MANAGEMENT AND FIRM PROFITABILITY OF LISTED CONGLOMERATES COMPANIES IN NIGERIA

• Published in: Gusau Journal of Accounting and Finance
• Main Authors: Marvis Irom Irom, Latifat Abdussalam Abdulfatah
• Format: Article
• Language: English
• Published: Department of Accounting and Finance, Federal University Gusau 2020-04-01
• Subjects: Working Capital Management; Firm Profitability; Conglomerates Firms & Nigeria
• Online Access: https://journals.gujaf.com.ng/index.php/gujaf/article/view/23
• ISSN: 2756-665X

This study examines impact of working capital management on firm’s profitability. The study focus on six (6) conglomerates firms listed on Nigeria Stock Exchange. Using the panel data set for the period 2012-2017, the impact of aggressive working capital investment and financing policies has been evaluated using return on asset. Random effect regression model was adopted for the study. The study reveals that Total Current Assets to Total Assets (TCA/TA) and size of the study firm have a positive and significant impact on firm profitability. The result further found that Total Current Liabilities/Total Assets (TCL/TA) has a negative significant impact on firm profitability. Though, the sales growth revealed an insignificant negative effect on the profitability of the firms. The study concluded that managers can create value if they adopt a conservative approach towards working capital investment and working capital financing policies since aggressive approach has been found to have a negative impact on return on asset. The study recommends that conglomerate companies in Nigeria adopt the conservative approach to working capital management so as to experience an increase in profitability for business sustainability.