Abstract
This study analyses the association concerning inventory turnover management and Nigerian conglomerate firms’ profitability. The study is used a historical panel data analysis. Data were generated from the yearly accounts of listed firms from 2007 to 2016. The population of the study consists of six conglomerate firms registered on the Nigerian Stock Exchange. Feasible generalized least square (FGLS) regression was utilized as tools of analysis in the study. The findings establish that inventory turnover management affects Nigerian conglomerate companies’ profitability inversely associated to the profitability of the listed conglomerate firms in Nigeria. The study suggests that there must be regular stock-taking to determine eventually, the slothful stocks to dodge over venture in such stocks (if any). Furthermore, if there is no high demand for the goods the inventory needs to be reduce that are obsolescence. Management should also implement an extraordinary inventory management measures.
Highlights
Inventory is a critical composition of firms’ current assets
The six listed conglomerate companies on the Nigerian Stock Exchange constitute the population of this study
In the overall considering both correlation and regression results, the result of correlation between ROA and ITP show a negative 0.0986 which implies as ITP reduces by less than 10% ROA will increase by the same percentage and on the other hand both z-value and p-value reveal a significant negative relationship between ITP and ROA, it will be deduced that relationship between the ITP and profitability of listed conglomerate firms in Nigeria is significant and negative
Summary
Inventory is a critical composition of firms’ current assets. The stocks of Industrial businesses habitually comprise: work-in-progress, raw materials, or finished products. Reducing a stock close to zero level may cause deficiency of raw material for production or finished product in demand. Such condition must be expensive for any firm because of the incomes they would lose (Maness & Zietlow, 2005). Especially in the conglomerate or manufacturing firms, the inventory turnover management is very important factor to be considered. Empirical findings on the relationship between inventory turnover and firm profitability are mixed. Globally there are limited studies that explored the role of inventory management on profitability of conglomerate firms. This study examines the impact of inventory turnover management on the Nigerian conglomerate firm’s profitability.
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