Abstract
Considering the possibility of finding a gap and a room for improvement, so much have been written about liquidity and performance. Notwithstanding, the emphasis has been on profitability as a yardstick for performance and little has been done on other areas of performance measurement. The emphasis has also been more on various economic sectors with the exception of the manufacturing industry. This paper intends to look at the impact, if any, of liquidity provision and availability on Nigeria’s manufacturing firm’s performance from the perspective of Economic Value Added (EVA). Economic value-adding is beyond just profitability or liquidity. The firm's value to the stakeholders, its sustainability and long-term values are defined. The study would apply liquidity theories, profitability and the economic value-added theories as it applies to a manufacturing firm in a developing economy like Nigeria. On its methodology, the article data is obtained from the World Bank’s World Development Indicators-WDI and then a regression analysis will be run on the data using the SPSS software and then an analysis of the results of the regression. The last section of the article would conclude and make recommendations from the study outcome and the empirical analysis with respect to the theories.
Highlights
The manufacturing sector, within the real sector of an economy, is an important sector that should be working optimally to bring about increased productivity to an economy
Annual data on the Manufacturing Value added as a percentage of the gross domestic product (GDP), loans given to the manufacturing sector, gross capital formation of the economy, lending rate and the inflation rate were collected for the study
Considering the fact many studies have looked into the effects of liquidity on profitability, as a performance tool on different sectors and especially the financial sector, this study decided to use the economic value added (EVA) approach to measure the impact of liquidity on the performance of the manufacturing firms in Nigeria
Summary
The manufacturing sector, within the real sector of an economy, is an important sector that should be working optimally to bring about increased productivity to an economy To achieve this optimal performance, the sector needs some inputs and operational resources which are determined, to an extent, by the amount of liquidity that is available for operational purposes.When talking about liquidity, the focus has been more on the other sectors of the economy other than the manufacturing sector and when talking about performance, the emphasis has been on profitability as a yardstick for performance and little has been done on other areas of performance measurement. Emphasis on the essence of liquidity has been more on the banking and financial sector just as the performance measurement tool has been on their profitability as affected by how liquid they are.
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