Impact of Liquidity Management on Profitability of Selected Companies in Nigeria

Abstract

Managing the liquidity position to enhance performance in an organization is imperative. This study examines the impact of liquidity management on the profitability of some selected food and beverage firms in Nigeria. This study adopted a case study research design. Secondary data was used to collect information from the annual reports of the selected firms from 2014 to 2018. Data was analyzed using multiple regression and Correlation analyses. The results of this study shows that current ratio; current assets/total assets ratio and working capital ratio have no .impact on the return on capital employed based on the p-values >0.01 level of significant. This study concludes that changes in the liquidity position exert no positive significant changes in the profitability of the selected firms. Thus, liquidity management has no impact on the profitability of firms in Nigeria. This study recommends that the management of firms in Nigeria and other countries should try to shorten the periods of converting accounts receivables and inventories to cash to improve liquidity. The outcome of this study will serve as a useful tool for future researchers in this area of study