Working Capital Management and Performance of Industrial and Consumer Goods Firms in Nigeria: A Comparative Analysis
This study conducted a comparative analysis on working capital management and performance of
industrial and consumer goods firms in Nigeria. Precisely, the study compared effect of average collection
period and average payment period on return on capital employed of selected industrial goods and consumer
goods firms. 20 firms were randomly selected over a period of 10 years data were collected from annual
report of the firms. This study used static data analyses to analyze data. Result showed average collection
period and average payment period exert insignificant positive effect on return on capital employed of
industrial goods firms, while both average collection period and average payment period exert insignificant
negative effect on return on capital employed of consumer goods firms. Independent t-test result showed
significant mean difference between coefficient estimate corresponding to industrial and consumer goods
firms. This study concluded that there exists significant difference between the effect of working capital
management on performance of industrial goods firms and consumer goods firms when performance is
measured in terms of return on capital employed. Hence firms in both sub-sectors should be strategic when
managing working capital, by setting higher average payment period in a manner that will not crowd-out
their credit worthiness.
www.dexteranalitics.com (22nd March, 2018).
Afza, T. & Nazir, M. S. (2007). Is it better to be aggressive or conservative in managing working capital?
Journal of quality and technology management, 3(2), 11-21.
Ahmadabadi, M. R., Mehrabi, E. & Yazdi, A. F. (2013). Impact of working capital management on the
performance of the firms listed on Tehran stock exchange, International journal of academic research
in accounting finance and management science, 3(3), 352-364.
Ajayi, M. A., Abogun, S. & Odediran, T. H. (2017). Impact of working capital management on financial
performance of quoted manufacturing firms in Nigeria, Covenant journal of business and social
sciences, 8(2), 1-22.
Aluko, N. (2018). Nigerian industrial and consumer goods: overview and opportunities. Retrieved from
www.kpakpakpa.com (22nd March, 2018).
Akindele, J. A. & Odusina, A. O. (2015). Working capital management and firm profitability: Evidence from
Nigeria quoted companies, Research journal of finance and accounting, 6(7), 148-153.
Aminu, Y. & Zainudin, N. (2015). A review of anatomy of working capital management theories and the
relevant linkages for working capital components: A theoretical building approach, European journal
of business and management, 7(2), 10-18.
Angahar, P. A. & Alematu, A. (2014). Impact of working capital on the profitability of Nigerian cement
industry, European journal of accounting, auditing and finance research, 2(7), 17-30.
Brealey, R. A., Myers, S. C. & Allen, F. (2006). Account receivables management, Corporate Finance, (8th ed., 15-
20). New York: McGraw Hill/Irwin.
Brigham, E. F. & Ehrhardt, M. C. (2004). Working capital management, financial management theory and
practice, (11th ed., Part 7). Ohio, Nigeria: Elm hill publisher.
Caballero, S. B., Teruel, P. J. G. & Salano, P. M. (2014). Working capital management, corporate performance
and financial constraints in United Kingdom, Journal of business research, 67, 332-338.
Central bank of Nigeria economy report. (2000). 61-95.
Central bank of Nigeria PMI report. (2017). 34-105.
Charitou, M., Lois, P. & Christoforou, A. (2016). The relationship between aggressive and conservative
working capital management policies and profitability, International journal of arts and commerce,
Cheng, N. S. & Pike, R. (2003). The trade credit decision: evidence of UK firms, Journal of managerial and
decision economics, 24(7), 419-438.
Chete, L. N., Adeoti, J. O., Adeyinka, F. M. & Ogundele, O. (2016). Industrial development and growth in Nigeria:
Lesson and challenges, 8, 1-38.
Chittenden, F., Poutziouris, P. & Micheal, N. (1998). Financial Management and Working Capital Practices in
UK SMEs, Manchester business school, Manchester.
Deloof, M. (2003). Does working capital management affect profitability of Belgian firms, Journal of business
finance and accounting, 30, 573-587.
Duru, A. N. & Okpe, I. I. (2016). Management of accounts payable on the financial performance of industrial,
domestic manufacturing companies in Nigeria, Journal of humanities and social science, 21(7), 54-61.Information Management and Business Review (ISSN 2220-3796)
Elejelly, A. (2004). Liquidity-profitability tradeoff, International Journal of Commerce and Management, 14(2),
Eya, C. I. (2016). Effect of working capital management on the performance of food and beverage industries in
Nigeria, Arabian journal of business and management review, 6(5), 1-7.
Gill, A., Biger, N. & Mathur, N. (2010). The relationship between working capital management and
profitability: Evidence from the United States, Business and economics journal, 10, 1-9.
Gitman, L. J. (2009). Account receivable management, Principles of managerial finance, (13th edition, 256-
309). Australia: Pearson prentice hall publisher
Haruna, A. M. (2016). Effects of working capital management on the performance of small and medium
enterprises in Nigeria. Doctorate’s thesis submitted to Jomo Kenyatta University of agriculture and
technology Juja, Kenya.
Howorth, C. & Westhead, P. (2003). The focus of working capital management in UK small firms, Management
Accounting Research, 14, 26-35.
Iswatia, S. (2007). The influence of intellectual capital to financial performance at insurance companies
Jakarta stock exchange, Melbourne, Australia: Proceedings of the 13th Asia Pacific management
conference, Melbourne, Australia.
Jagongo, A. O. & Makori, D. M. (2013). Working capital management and firm profitability: Empirical evidence
from manufacturing and construction firm listed on Nairobi securities exchange Kenya, International
journal of accounting and taxation, 1(1), 1-14.
Jegede, M. (2017). Ajaokuta steel and Nigeria’s industrialization dream, Retrieved July 11, 2018, from
Knauer, T. & Wohrman, A. (2013). Working capital management and firm profitability, Journal of management
control, 24(1), 77-87
Lamberson, M. (1995). Changes in working capital of small firms in relation to changes in economic activity,
Mid-American journal of business, 10(2), 45-50.
Li, Q. (2016). Working capital management and its effect on the profitability of Chinese listed firms. Master’s
thesis submitted to ISCTE business school, China.
Madugba, J. U. & Ogbonnaya, A. K. (2016). Working capital management and financial performance: Evidence
from manufacturing companies in Nigeria, European journal of accounting, auditing and finance
research, 4(9), 98-106.
Mathur, B. S. (2003). Working capital policy, Working capital management and control principles and
practice, (2nd revised ed., 9-29). New Delhi, India: New age international (P) limited, publisher.
Moles, P., Parrino, R. & Kidwell, D. S. (2011). Working capital management and financial decisions, corporate
finance, (European ed., Part 5). UK: John Wiley &Sons, Ltd.
Mun, S. G. & Jang, S. S. (2015). Working capital, cash holding and profitability of restaurant firms, International
journal of hospitality management, 48, 1-11.
Naeem, U. H., Malik, M. I., Muhammad, A. & Mehbood, H. (2014). Working capital management on firm
performance: An empirical study of non-financial listed firms in Pakistan, International journal of
academic research in business and social sciences, 4(6), 114-132.
Niresh, J. A. (2012). Working capital management and financial performance of manufacturing sector in Sri
Lanka, European journal of business and management, 4(5), 1905-2222.
Ogundipe, S. E., Idowu, A. & Ogundipe, L. D. (2012). Working capital management, firm’s performance and
market valuation in Nigeria, International journal of social, behavioral, educational, economics and
industrial engineering, 6(1), 19-23.
Ojeani, N. R. (2014). Working capital management and profitability of listed pharmaceutical firms in Nigeria.
Master’s thesis submitted to Ahmadu Bello University Zaria, Nigeria.
Oladunjoye, P. (2011). Ajaokuta steel company another white elephant project, Retrieved July 11 2018.
Osundina, J. A. (2014). Working capital management and profitability: Evidence from quoted food and
beverages Manufacturing firms in Nigeria, Journal of finance and accounting, 5(4), 101-107.
Padachi, K. (2006). Trends in working capital management and its impact on firm’s performance: An analysis
of Mauritian small manufacturing firms, International review of business research papers, 2(2), 45-58.
Raheeman, A. & Nasr, M. (2007). Working capital management and profitability, International review of
business research papers, 3, 279-300.Information Management and Business Review (ISSN 2220-3796)
Salman, A. Y., Oyetayo O. F. & Oriowo, A. O. (2014). Working capital management: A study of selected listed
manufacturing companies in Nigerian stock exchange, International journal of academic research in
business and social sciences, 4(8), 287-295.
Schwartz, R. A. (1994). An economic model of trade credit, Journal of financial and quantitative analysis, 9(4),
Shim, J. K. & Siegel, J. G. (2000). Financial management (2nded.). Hauppauge, New York: Beuron Business
Singh, J. P. (2004). Inventory and working capital management: An empirical analysis, The Kafia university
journal of accounting research, 35, 1-72.
Uyar, A. (2009). The relationship of cash conversion cycle with firm size and profitability: An empirical
investigation in Turkey, International research journal of finance and economics, 24, 186-193.
Vahid, T. k., Ealham, G., Moshsen, A. k. & Mohammmadreza, E. (2012). Working capital management and
corporate performance: Evidence from Iranian companies, Social and behavioral sciences, 62, 1313-
Van Hore, J. C. (2001). Liability management and short/medium-term financing, financial management and
policy, (12th ed., 483-518). New Jersey, United States: Prentice hall, upper saddle river.
Van Hore, J. C. & Wachowicz, J. M. (2004). Overview of working capital management, Fundamentals of
financial management, (12th ed., 304-480). New York, United States: Prentice Hall.
Copyright (c) 2019 Olaoye, Clement Olatunji, Adeboboye, Roseline
This work is licensed under a Creative Commons Attribution 4.0 International License.
Author (s) should affirm that the material has not been published previously. It has not been submitted and it is not under consideration by any other journal. At the same time author (s) need to execute a publication permission agreement to assume the responsibility of the submitted content and any omissions and errors therein. After submission of revised paper in the light of suggestions of the reviewers, the editorial team edits and formats manuscripts to bring uniformity and standardization in published material.
This work will be licensed under Creative Commons Attribution 4.0 International (CC BY 4.0) and under condition of the license, users are free to read, copy, remix, transform, redistribute, download, print, search or link to the full texts of articles and even build upon their work as long as they credit the author for the original work. Moreover, as per journal policy author (s) hold and retain copyrights without any restrictions.