EMPIRICAL ANALYSIS OF WORKING CAPITAL MANAGEMENT AND THE MARKET PERFORMANCE OF LISTED CONSUMER GOODS MANUFACTURING FIRMS IN NIGERIA

Abstract

The study examines the effect of working capital management on firm market performance in Nigeria drawing samples from listed consumer goods manufacturing firms in Nigeria from 2011-2020. In this study, working capital management is measured in terms of current ratio, payable management, and receivable management while firm market performance is measured in terms of Tobin Q. Furthermore, the researcher used the variable of firm size to control the model’s goodness of fits. Specifically, to achieve the objective of the study, the researcher conducted pool least square regression before proceeding to check for inconsistencies with the basic assumptions of the OLS regression. Succinctly, these diagnostics tests include test for multicollinearity as well as test for heteroscedasticity. It was established in this study that there exists a relationship between working capital management and firm market performance. Specifically, the study concludes that only the variable of payable management significantly impact firm market performance of consumer goods manufacturing firms in Nigeria. However, the researcher also concludes that while current ratio insignificantly decrease firm market performance, receivable days insignificantly improves firm market performance of listed consumer goods manufacturing firms in Nigeria. Based on the findings of this study, the researcher carefully recommends that the management of consumer goods manufacturing firms should establish a long-term relationship with their suppliers to increase access to credit grants in a more easy and fast way, as increased payable management enhances firm market performance.