Abstract
This study examined the effect of assets utilization on performance of selected manufacturing firms in Nigeria. Secondary data were collected from the annual report and accounts of the ten selected quoted firms for a period of five years spanning from 2012 to 2016. Data collected were analyzed using descriptive statistics, correlation and regression analyses. The empirical results revealed that asset turnover(ATR) has positive and significant effect on return on assets (ROA) of the selected manufacturing firms as confirmed by the coefficient and probability value of 0.235999(p=0.0000). Current assets ratio also has positive and significant effect on return on assets with the coefficient of 0.109040 (p=0.0035) while debt assets ratio has negative but insignificant effect on return on assets. The overall coefficient of determination (R2)of 0.84951showed that about 85 % of the total variation in the ROA is explained by asset turnover (ATR), current ratio (CUR) and debt-assets ratio (DAR). The study concluded that assets utilization has positive and significant effect on the performance of manufacturing firms in Nigeria and therefore recommended that attention should be purposely paid to optimum asset utilization in the manufacturing firms in Nigeria.
Highlights
The ultimate goal of a firm is to maximize the stockholders’ wealth from the financial point of view
If there is a N1 naira increase in asset turnover ratio, it will translate to 24k in (ROA) of the studied companies
The implication of the results is that every N1 naira increase in current ratio, it brings 11k in return on assets (ROA)
Summary
The ultimate goal of a firm is to maximize the stockholders’ wealth from the financial point of view. Factors that have significant effects on determination of firm performance could be divided into micro and macro factors. Any change in the macro factors in the economy affects the firms which could be seen in the performance of the firm as well. These effects could be positive or negative depending on the change in the macro environment and structure of the firm (Demirhan & Anwar, 2014). A manufacturing company utilizes its assets, primarily its inventory and equipment in producing revenue. For this reason, an important financial measurement is return on assets. By dividing net income from a manufacturing plant by the assets, a manufacturing company can measure how successful its business is in utilizing its assets to develop a profit for the company
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