Effect of Working Capital Management on Performance of Listed Basic Materials Companies in Nigeria

Authors

  • Omoniyi Jacob Eniola
  • Taiwo Olubunmi Depo-Mogaji
  • Foluke Omowumi Yomi-Bello

Keywords:

Working Capital Management, Profitability, Listed Nigerian Basic Material Companies

Abstract

This study looked at how working capital affected the profitability of Nigerian listed basic
materials companies. The target audience for this study, which used a descriptive research
approach, consisted of ten public basic materials companies. For a ten-year period, from
2010 to 2019, the firms' public financials were the source of secondary data for the study.
The links between working capital management components and the firms' profit after tax
were examined using correlation analysis of the data. According to the study, there is a
correlation between current liabilities to total liabilities, current assets to total assets, and
current ratios for basic materials companies that is favorable. The hypothesis test conducted
on the slope of ROA against each working capital management indicator revealed that there
is no significant correlation between working capital management (WCM) and returns on
assets (ROA). The report so advises managers to concentrate on conservative policies, which
call for strong cash balances and high stock reserves. This is because for the listed Nigerian
materials companies, there is a positive correlation between return on assets and current
ratio.

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Published

2023-11-21