Abstract
Working
capital is the 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 mvo ves t e application ofstrategies
and policies in the use affirm's current assets and liabilities in such a way
that an optimum level ofworking capital is maintained. In essence, the goal
ofworking capital management is to promote a satisfying profitability and
maximizes shareholders va ue. 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/TA 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 profit 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 profitability. 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. It 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 take short paymentperiod.
AKUZIE, U (2024). Effect Of Working Capital Management On Financial Performance Of Brewery Companies In Nigeria:- Akuzie Maria U. Mouau.afribary.org: Retrieved Oct 30, 2024, from https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-financial-performance-of-brewery-companies-in-nigeria-akuzie-maria-u-7-2
UDOKA, AKUZIE. "Effect Of Working Capital Management On Financial Performance Of Brewery Companies In Nigeria:- Akuzie Maria U" Mouau.afribary.org. Mouau.afribary.org, 21 Aug. 2024, https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-financial-performance-of-brewery-companies-in-nigeria-akuzie-maria-u-7-2. Accessed 30 Oct. 2024.
UDOKA, AKUZIE. "Effect Of Working Capital Management On Financial Performance Of Brewery Companies In Nigeria:- Akuzie Maria U". Mouau.afribary.org, Mouau.afribary.org, 21 Aug. 2024. Web. 30 Oct. 2024. < https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-financial-performance-of-brewery-companies-in-nigeria-akuzie-maria-u-7-2 >.
UDOKA, AKUZIE. "Effect Of Working Capital Management On Financial Performance Of Brewery Companies In Nigeria:- Akuzie Maria U" Mouau.afribary.org (2024). Accessed 30 Oct. 2024. https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-financial-performance-of-brewery-companies-in-nigeria-akuzie-maria-u-7-2