A Comparative Analysis on Working Capital Management of Brewery Companies in Nigeria.

Abstract

This research work carry out a comparative analysis on working capital management of brewery companies in Nigeria. The study aimed to examine the cost of working capital and the effect on firm performance and to take a critical view of the adopted liquidity measures of the Nigeria firm and attempt to see how it has been achieved. Secondary data were employed in this study from journals, textbooks and annual reports of the selected companies. However, ratio analysis was used to analyze the data collected which is the best statistical techniques for working capital management. The result of the test analyzed indicates Guinness Nigeria possessed huge amounts of current assets than Consolidated breweries. It was also deduced that inventories and debtors were very high in case of the Guinness Nigeria whereas current liabilities where still on the moderate level except in 2013 which recorded a higher current liabilities than the current asset. Cash balances were comparatively high in both cases. On the behalf of Receivable Management for the companies, it can be concluded that, undoubtedly, the Guinness Nigeria was much more efficient in the management of cash as compared to the Consolidated breweries which was laming in this regard and was way behind it. On the behalf of study of payables management it was observed and concluded that the consolidated breweries was better off than Guinness Nigeria as regard liquidity and payment to creditors as their credit periods were much shorter than the Guinness Nigeria, nevertheless the Guinness Nigeria derived benefits from the massive credit periods. The major recommendation of this study is that working capital management should be the concern of all the manufacturing sectors firms and need to be given due importance. The collection and payment policies of the firms in manufacturing sectors, in general, need to be thoroughly reviewed. It is generally argued that firms need to accelerate their cash collections and slowdown their payments. This can only be possible with some professional advice and supervision. The findings indicate that firm managers/executives can enhance performance of the firms by reducing the number of days in inventories, Cash Conversion Cycle and Net Trade Cycle to a reasonable minimum.