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Entrepreneurial Financial Slack and Firm Profitability Among Listed Food and Beverage Products Firms in Nigeria

Okechukwu Ferdinand Cyril-Nwuche, PhD

Abstract

This study examined the effect of entrepreneurial financial slack on firm profitability among listed food and beverage products firms in Nigeria. Entrepreneurial financial slack was measured by current ratio, while firm profitability was proxied by net profit margin. The study adopted an ex-post facto research design, with a population of all 16 food and beverage products firms listed on the Nigerian Exchange Group as of December 31, 2024, from which 12 firms were purposively sampled. Secondary data were obtained from audited annual reports and financial statements covering the period 2015 to 2024. The hypothesis was tested using panel least square regression analysis at a 5% level of significance. Findings revealed that entrepreneurial financial slack had a positive and significant effect on firm profitability, leading to the conclusion that maintaining adequate slack resources enhances the profitability of food and beverages products firms in Nigeria. The study recommended that financial managers of listed food and beverage firms in Nigeria should deliberately maintain adequate levels of liquid assets and avoid over-tight working capital structures. By ensuring that sufficient financial slack exists in the form of a healthy current ratio, managers will be better positioned to meet short-term obligations without distress, reinvest quickly in emerging opportunities, and cushion the firm against market shocks.

Keywords

Entrepreneurial Financial SlackFirm ProfitabilityCurrent RatioNet Profit Margin

References

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