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Property, Plant and Equipment Measurement and Financial Performance of Listed Manufacturing Firms in Nigeria

Samson Aluya, Ph.D, ACA, ACTI, Okere Ogadinma Bekee Ph.D

Abstract

This study examined the effect of property, plant and equipment measurement on the financial performance of listed manufacturing firms in Nigeria. The specific objectives were to ascertain the effect of property, plant and equipment intensity on return on assets of listed manufacturing firms in Nigeria, determine the effect of depreciation intensity on return on assets of listed manufacturing firms in Nigeria and assess the effect of revaluation surplus ratio on return on assets of listed manufacturing firms in Nigeria. The study adopted an ex-post facto research design and utilized secondary data extracted from the annual reports and accounts of twelve listed manufacturing firms in Nigeria for the period 2015 to 2024. The balanced panel produced 120 firm-year observations. Financial performance was proxied by return on assets while property, plant and equipment measurement was proxied by property, plant and equipment intensity, depreciation intensity and revaluation surplus ratio. Firm size, leverage and sales growth were introduced as control variables. The data were analyzed using descriptive statistics, Pearson correlation analysis, diagnostic tests and panel least squares regression through EViews 10.0. The Hausman test supported the fixed effect model. The findings revealed that property, plant and equipment intensity had a positive and significant effect on return on assets, depreciation intensity had a negative and significant effect on return on assets, while revaluation surplus ratio had a positive and significant effect on return on assets of listed manufacturing firms in Nigeria. The study concluded that property, plant and equipment measurement significantly affected the financial performance of listed manufacturing firms in Nigeria. It was recommended, among others, that listed manufacturing firms should link PPE investment and revaluation decisions to productive capacity, maintenance discipline, asset utilization and transparent IAS 16 disclosure. JAFM JAFM

Keywords

Propertyplant and equipment measurementPPE intensitydepreciation intensityrevaluation surplusreturn on assetsfinancial performancelisted manufacturing firmsNigeria.

References

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