Inventory Flow Management and Profitability of Quoted Food and Beverage Manufacturing Firms in Nigeria

Dr Innocent Ezinwene Chinda; Dr Eunice Ralph Court

doi:10.56201/jafm.vol.11.no3.2025.pg186.196

📄 Download Paper

Inventory Flow Management and Profitability of Quoted Food and Beverage Manufacturing Firms in Nigeria

Dr Innocent Ezinwene Chinda, Dr Eunice Ralph Court

Abstract

This study examines the impact of inventory flow management on financial performance in the Nigerian food and beverage manufacturing sector. Using an ex-post facto research design, secondary data from sixteen listed firms on the Nigerian Stock Exchange (NSE) between 2017 and 2021 were analyzed. The study employs bivariate regression to assess the relationship between Economic Order Quantity (EOQ) and Return on Assets (ROA), as well as Inventory Turnover (ITO) and Return on Equity (ROE). The findings indicate that EOQ has a significant positive effect on ROA (? = 1.405, p = 0.016), suggesting that optimal inventory management enhances asset efficiency and profitability. Conversely, ITO exhibits an insignificant negative relationship with ROE (? = -0.501, p = 0.384), implying that frequent inventory turnover does not necessarily improve shareholder returns. These results emphasize the importance of inventory optimization in driving firm performance while highlighting the need for complementary financial strategies to enhance overall profitability. The study contributes to inventory management literature by demonstrating how EOQ influences asset utilization, while also cautioning against over-reliance on turnover rates as a sole determinant of financial success.

Keywords

Inventory flow managementEconomic order quantityInventory turnoverFinancial

References

Adebayo, S., & Olayemi, T. (2021). Inventory management strategies and financial performance of manufacturing firms in Nigeria. Journal of Business and Finance, 12(3), 45-60. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120. Chen, X., Li, Y., & Wang, J. (2019). Inventory turnover and firm profitability: Evidence from emerging markets. Asian Journal of Finance & Economics, 14(1), 75-91. Coase, R. (1937). The nature of the firm. Economica, 4(16), 386-405. Eze, C., & Nwosu, P. (2023). Inventory turnover and profitability of consumer goods firms: Evidence from Nigeria. African Journal of Economic Studies, 18(2), 112-130. Harris, F. W. (1913). How many parts to make at once. Factory, The Magazine of Management, 10(2), 135-136. Johnson, P., & Parker, L. (2017). Inventory turnover and financial performance: An empirical study of retail firms. Accounting and Finance Review, 10(4), 211-230. Kumar, R., & Rajeev, M. (2022). Economic Order Quantity (EOQ) and Just-in-Time (JIT): A comparative study on inventory control efficiency. International Journal of Supply Chain Management, 9(4), 78-94. Obi, K., & Uchenna, E. (2022). The role of inventory management in optimizing financial performance: A study of the Nigerian manufacturing sector. Nigerian Journal of Management Research, 15(1), 23-39. Ohno, T. (1988). Toyota production system: Beyond large-scale production. Productivity Press. Olawale, T., & Adekunle, B. (2023). Inventory management practices and firm profitability: A case of food and beverage companies in Nigeria. West African Journal of Business Administration, 10(5), 55-72. Olufemi, T., & Ajayi, K. (2020). Inventory optimization and financial performance of listed firms in Nigeria. Journal of Business and Finance, 15(2), 99-115. Singh, R., Gupta, M., & Kumar, S. (2018). The impact of Economic Order Quantity (EOQ) on firm performance: A case study of manufacturing firms. International Journal of Operations Management, 12(3), 145-162. Williamson, O. E. (1975). Markets and hierarchies: Analysis and antitrust implications. Free Press. Williamson, O. E. (1985). The economic institutions of capitalism. Free Press.

Inventory Flow Management and Profitability of Quoted Food and Beverage Manufacturing Firms in Nigeria

Abstract

Keywords

References

More Articles from JOURNAL OF ACCOUNTING AND FINANCIAL MANAGEMENT