Effect of Accounts Receivables on the Financial Performance of Quoted Companies in Nigeria:- Emukah Lisa C

ABSTRACT

This study sought to establish the effect of accounts receivables on financial performance of quoted companies in Nigeria. The target population comprised all quoted companies in the Nigerian stock market. The study reviewed both theoretical and empirical literature on accounts receivable. From the review ofrelated literature, a comprehensive conceptual framework of argument of the relationship between accounts receivables and financial performance was formulated. Secondary data was collected from the annual financial statement ofthe reviewed quoted company. Profit after tax (PAT) was used as proxy for financial performance while Account Receivable Collection Ratio (ARCR), account receivable turnover ratio (ARTR) and inventory conversion ratio (ICR) were used as proxies for independent variable.Applying E-Views version 10.0, descriptive and inferential statistic were used to analyse the data. The result ofthe correlation analysis showedthat there is a positive relationship between accounts receivables and financial performance of Premier Paints Pic. Specifically, account receivable collection ratio had statistically significant [2.0851] effect on profit after tax, account receivable turnover ratio also had significant [2.548] effect on profit after tax while inventory conversion ratio showed positive and significant [3.856] effect on profit after tax. The coefficient determination (R2= 0.6044) showed that about 60% of the variations in the dependent variable was influenced by the independent variables; therefore, the study concluded that there is significant effect of account receivables on profit after tax ofPremier Paints Pic. The study recommend that managers in the quoted company should put in place good credit policies to enhance efficient management of accounts receivable thereby improve on their financial performance.