ABSTRACT
Working capital is tile capital
of a business which is used in its day-to-day trading operations, calculated as
the difference between current asset and current liabilities. Working capital management
application 0f strategies and policies in the use of firm's current assets and
liabilities in such a way that an optimum level of working capital is
maintained. In essence, the goal of working capital management is to promote a satisfying
profitability and maximizes shareholders value. The study analysed the effect
of working capital management on the performance of manufacturing companies in
Nigeria, to tackle the problem of using wrong method in measuring working
capital; overcapitalization or undercapitalization of stock and neglecting of
operating cycle by examining the extent to which working capital affect return
on asset, return on equity and net profit margin. Regression analyses was
carried out on the data to determine relationships between working capital management
and return on asset, return on equity and net profit margin. The study
established that CA/TA and CL/TA both has relationship with return on equity.
CL/T4 has a significant relationship with return on assets while CA/TA has no
significant relationship with return on assets, CA/TA has a significant
relationship with net pro/if margin while CL/TA has no significant relationship
with net profit margin. The study recommends that the manufacturing firms
should manage their working capital efficiently to achieve optimal profitable.
This' can be achieved by improving the inventory control process, collecting
receivables in line with the agreed credit terms and by delaying payments to
suppliers. All these will lead to shortening the cash conversion cycle
resulting to an increase in profitability. If is also recommended that there should
be proper inventory management system to avoid over stock of inventory. Manufacturing
firms should engage in relationship with those suppliers who allow long credit time
period and those customers who will lake short payment period.
AKUZIE, U (2021). Effect Of Working Capital Management On Financial Performance Of Brewery Companies In Nigeria. Mouau.afribary.org: Retrieved Nov 27, 2024, from https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-financial-performance-of-brewery-companies-in-nigeria-7-2
UDOKA, AKUZIE. "Effect Of Working Capital Management On Financial Performance Of Brewery Companies In Nigeria" Mouau.afribary.org. Mouau.afribary.org, 23 Jul. 2021, https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-financial-performance-of-brewery-companies-in-nigeria-7-2. Accessed 27 Nov. 2024.
UDOKA, AKUZIE. "Effect Of Working Capital Management On Financial Performance Of Brewery Companies In Nigeria". Mouau.afribary.org, Mouau.afribary.org, 23 Jul. 2021. Web. 27 Nov. 2024. < https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-financial-performance-of-brewery-companies-in-nigeria-7-2 >.
UDOKA, AKUZIE. "Effect Of Working Capital Management On Financial Performance Of Brewery Companies In Nigeria" Mouau.afribary.org (2021). Accessed 27 Nov. 2024. https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-financial-performance-of-brewery-companies-in-nigeria-7-2