WORKING CAPITAL MANAGEMENT AND FIRM PROFITABILITY OF LISTED CONGLOMERATES COMPANIES IN NIGERIA
DOI:
https://doi.org/10.57233/gujaf.v1i1.23Keywords:
Working Capital Management, Firm Profitability, Conglomerates Firms & NigeriaAbstract
This study examines impact of working capital management on firm’s profitability. The study focus
on six (6) conglomerates firms listed on Nigeria Stock Exchange. Using the panel data set for the
period 2012-2017, the impact of aggressive working capital investment and financing policies has
been evaluated using return on asset. Random effect regression model was adopted for the study.
The study reveals that Total Current Assets to Total Assets (TCA/TA) and size of the study firm have
a positive and significant impact on firm profitability. The result further found that Total Current
Liabilities/Total Assets (TCL/TA) has a negative significant impact on firm profitability. Though,
the sales growth revealed an insignificant negative effect on the profitability of the firms. The study
concluded that managers can create value if they adopt a conservative approach towards working
capital investment and working capital financing policies since aggressive approach has been found
to have a negative impact on return on asset. The study recommends that conglomerate companies
in Nigeria adopt the conservative approach to working capital management so as to experience an
increase in profitability for business sustainability.