Impact of working capital management on the profitability of firms in Nigeria.

Abstract

This study assessed the impact of working capital management on profitability of firms in Nigeria. Secondary data from the annual reports of five Nigerian companies were used in the study. Static panel analysis of random effect regression was used in the study. Receivable days were found to be a significant determinant of firms' profitability. Additionally, the study found that a key factor influencing the profitability of Nigerian businesses is the inventory turnover ratio. The study concluded that working capital management significantly affects profitability of Nigerian firms. In order to produce sufficient profitability for owners and shareholders, it was advised that listed companies should focus more on bringing inventories and accounts receivable down to a manageable level.