Abstract
This study assessed working capital management and performance of listed manufacturing firms in Nigeria 20 firms were sampled, over 10 years. The study employed static data analyses and panel Granger causality test. Result showed that average collection period exerts insignificant negative effect on return on capital employed of the sampled firms, while average collection period also exerts insignificant negative effect on earnings per share of the sampled firms. The result further showed that, average payment period exerts insignificant positive effect on return on capital employed of the sampled firms, but average payment period exerts insignificant negative effect on earnings per share of the sampled firms. The study concluded that, average collection period and average payment exert insignificant effect on return on capital employed of listed manufacturing firms in Nigeria, also; average collection period and average payment period exert insignificant effect on earnings per share of listed manufacturing firms in Nigeria. Hence manufacturing firms in Nigeria should objectively manage average collection period and also maintain a consistent improvement in return on capital employed and earnings per share of listed manufacturing firms in Nigeria.
Highlights
Working capital is one major factor upon which stability and survival of a business entity depend
Working capital management is sustaining an adequate level of working capital, which is meant for short-term period
Several studies had been conducted on assessing working capital management and performance of listed manufacturing firms across countries over time, observably previous studies measured performance using return on asset, return on equity, gross operating profit and net operating profit
Summary
Working capital is one major factor upon which stability and survival of a business entity depend. Working capital is the fund used for the daily running of a business. It is the resources that are liquid in nature which are needed by a business entity to sustain stable cash flow. Working capital management is sustaining an adequate level of working capital, which is meant for short-term period. Working capital management is sustaining adequate liquidity for business survival in short-term period. Niresh (2012) opined that working capital management is important in determining firm’s performance. Working capital management is maintaining sufficient cash flow level to manage its liabilities, which is done in the best interest of shareholders. Several studies had been conducted on assessing working capital management and performance of listed manufacturing firms across countries over time, observably previous studies measured performance using return on asset, return on equity, gross operating profit and net operating profit
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