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 involves the
application of 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 cap ital; 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. Data collected
was a secondary data, obtained from consolidated financial report of PZ Cussons
Nigeria PLC of years ending, from 2007 through 2015. 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 signflcant relationship with return on assets while CA/TA
has no signflcant relationship with return on assets, CA/TA has a sign ficant
relationship with net profit margin while CL/TA has no sign fIcant 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 re1ationsh4 with those
suppliers, who allow long credit time period and those customers who will take
short payment period.
ONYEKACHI, C (2021). Effect Of Working Capital Management On The Performance Of Manufacturing Companies In Nigeria, (A Study Of Pz Cussons Nigeria Plc). Mouau.afribary.org: Retrieved Nov 28, 2024, from https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-the-performance-of-manufacturing-companies-in-nigeria-a-study-of-pz-cussons-nigeria-plc-7-2
CHIDINMA, ONYEKACHI. "Effect Of Working Capital Management On The Performance Of Manufacturing Companies In Nigeria, (A Study Of Pz Cussons Nigeria Plc)" Mouau.afribary.org. Mouau.afribary.org, 22 Nov. 2021, https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-the-performance-of-manufacturing-companies-in-nigeria-a-study-of-pz-cussons-nigeria-plc-7-2. Accessed 28 Nov. 2024.
CHIDINMA, ONYEKACHI. "Effect Of Working Capital Management On The Performance Of Manufacturing Companies In Nigeria, (A Study Of Pz Cussons Nigeria Plc)". Mouau.afribary.org, Mouau.afribary.org, 22 Nov. 2021. Web. 28 Nov. 2024. < https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-the-performance-of-manufacturing-companies-in-nigeria-a-study-of-pz-cussons-nigeria-plc-7-2 >.
CHIDINMA, ONYEKACHI. "Effect Of Working Capital Management On The Performance Of Manufacturing Companies In Nigeria, (A Study Of Pz Cussons Nigeria Plc)" Mouau.afribary.org (2021). Accessed 28 Nov. 2024. https://repository.mouau.edu.ng/work/view/effect-of-working-capital-management-on-the-performance-of-manufacturing-companies-in-nigeria-a-study-of-pz-cussons-nigeria-plc-7-2