IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 11 NO. 2 2025
DOI: 10.56201/jafm.vol.11.no2.2025.pg356.368

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Working Capital Management and Financial Performance of Listed Consumer Goods Firms in Nigeria

THOMPSON, Emem Aniekan, AKPAN, Dorathy Christopher, OKPO, Sunday A

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Abstract

Working capital management plays a crucial role in ensuring financial stability and operational efficiency for businesses. This study examines the effect of working capital management on the financial performance of listed consumer goods firms in Nigeria from 2014 to 2023. Using secondary data from 16 out of 21 listed companies, the study employs weighted least squares regression analysis via STATA 14.2 to assess the relationship between working capital components and return on equity (ROE). The findings reveal that the inventory holding period has a significant negative effect on ROE, indicating that excessive stock retention reduces profitability due to increased holding costs and inefficient capital allocation. The receivable collection period, however, shows a statistically non-significant positive effect on ROE, suggesting that variations in credit management practices may moderate its impact. These results underscore the importance of efficient working capital management in optimizing financial performance. The study recommends that consumer goods firms adopt strategic inventory management techniques, such as just-in-time (JIT) systems, to reduce holding costs and improve liquidity. Additionally, firms should strengthen their receivables collection processes effectively to maximize shareholder value. Future research could explore sectoral differences and incorporate additional financial metrics to provide deeper insights into the working capital-performance relationship.

keywords:

Working Capital, Financial Performance, Consumer Goods, Return on Equity,

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