IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 10 NO. 10 2024
DOI: 10.56201/jafm.v10.no10.2024.pg72.80

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Current Ratio and Profitability Nexus of Listed Consumer Goods Firms in Nigeria

Nangih, Efeeloo Ph.D, FCA, FCTI Diepreye Bail FCA, MSc, FIMC

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Abstract

This study uses panel data approach to investigate the impact of current on profitability of consumer goods manufacturing firms listed on the Nigeria Exchange Group. It specifically examines the effect of Current Ratio on Return on Assets (ROA) and Return on Equity (ROE). The research was anchored on the Liquidity Preference Theory, proposed by Keynes in 1930, which suggests that investors prefer cash or other highly liquid holdings. A quantitative, longitudinal research design was adopted. Purposive sampling techniques was employed to select Nestlé Nigeria Plc, Dangote Sugar Plc, Bua Foods PLC, and Unilever Plc as samples used for the study. Data were collected from 2016 to 2023 and were analyzed using descriptive statistics correlation and regression analysis, with the aid of Eviews analytical software. The findings indicate that the Current Ratio positively influences ROE. The study recommends that firms prioritize maintaining a strong Current Ratio.

keywords:

Current Ratio, Return on Assets, Return on Equity, Nigeria Exchange Group

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