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Assets Structure and Financial Performance of Non-Financial Firms in Nigeria

EJOH, John Nwachukwu, Prof ONUORAH, A C F, CIFIAN

Abstract

This study examined the effect of asset structure on financial performance of non-financial firms in Nigeria for the period of 2014-2023 (10years). The study's particular aims are to analyze asset structure [Current Asset Ratio (CART), Non-Current Asset Ratio (NCART), Intangible Asset Ratio (INTART) and Financial Asset Ratio (FAR)] and financial performance (proxied with Return on Assets (ROA)) of the listed non-financial firms on the Nigeria Exchange Group, and the secondary data used in the analysis came from the companies' annual reports and accounts. There were four research questions and four hypotheses offered. Descriptive statistics, correlation, panel unit root test, Pendronic Cointegration test and panel least square regression analysis (E-VIEW 9.0) at the 0.05 level of significance (95% confidence interval) were employed to evaluate the hypotheses. The results showed that CART, NCART and FAR all have a substantial influence on ROA, however INTART does not. The study revealed that asset structure has significant effect on financial performance of non-financial firms in Nigeria. The study therefore, recommends that firms should focus on optimizing their current asset management practices to ensure liquidity and operational efficiency. This can be achieved through better inventory management, receivables collection, and cash flow forecasting. Companies should consider strategic investments in non-current assets that align with their long-term growth objectives. This includes investing in technology and infrastructure that can improve productivity and operational efficiency. This study contributes to the existing body of knowledge by providing empirical evidence on the relationship between various asset ratios and return on assets in the context of non-financial firms in Nigeria.

Keywords

Asset StructureCurrent Asset RatioNon-Current Asset RatioIntangible Asset Ratio

References

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