Working Capital Management and Financial Performance of Listed Agricultural Companies in Nigeria

Abstract

This study examined the effect of working capital management on the financial performance of selected Agricultural manufacturing firms in Nigeria. The components of working capital management are the inventory conversion period, accounts receivable period, accounts payable period, and current ratio while the financial performance is proxied by ROA. The study adopts an ex post facto research design. The population of the study comprised five Agricultural companies listed on the Nigerian Securities Exchange as of December 2022. A purposive sampling technique was used to select four companies that have complete data. Time series data were collected using secondary sources from the published financial statements of the companies and the Nigerian Stock Exchange from 2011 to 2022. Descriptive statistics and inferential statistics using correlation and regression analyses were employed for the statistical analyses. This study found that there is a negative and statistically insignificant effect of INVCP on the ROA of the selected agricultural manufacturing companies. Also, there is a negative statistically insignificant effect of ACRVP on ROA. However, there is a positive statistically insignificant effect of ACPP and current ratio on the ROA of the selected manufacturing firms. The study concludes that efficient and effective working capital management is of utmost importance in Agricultural manufacturing firms in Nigeria. The study recommends that there is a need for the implementation of strategies that focus on optimizing inventory management processes to reduce carrying costs without compromising operational efficiency. It is also suggested these companies need to address these challenges by optimizing receivables management. Keywords: Working Capital Management, Accounts Receivable Period, Accounts Payable Period, Return on Assets Journal Reference Format: Adesina, O.D., Oluwadare, O.E. & Ogunleye, W.A. (2024): Nigerian Textiles in Sustainable National Development: Forces of Adversity. Humanities, Management, Arts, Education & the Social Sciences Journal. Vol. 12. No. 2, Pp 9-22.. www.isteams.net/humanitiesjournal. dx.doi.org/10.22624/AIMS/HUMANITIES/V12N2P2