Effect Of Cash Flow Component On Financial Performance Of Quoted Companies In Nigeria

ABSTRACT

This work examines the effect of cash flow components on the financial performance of listed firms in Nigeria. Cash flow statement, as the third main financial statement, shows the resources and consumptions of cash in a business unit during an accounting period. The study adopts ex-post facto research design. The population of the study covers the five listed agro allied companies on the Nigerian stock exchange market but for the constraint of getting financial statement the study looks at 4. The research work adopts the secondary source of data in obtaining all the data needed for the study. Extracted data from the audited financial statements of the sampled companies will be meticulously examined and relevant data extracted from the period 2009-2015 for analysis. The descriptive statistics is used to summarize the collected data in a clear and understandable way using numerical approach. The multiple regression technique using ordinary least square regression (OLS) method is adopted in investigating the relationship between the dependent and independent variables.  It was therefore found that there is no significant effect of cash flow from operations on profitability of listed firms and there is a significant effect of Cash flow from financing activities on profitability of listed firms. The study therefore recommends that firms should maintain a high cash flow ratio as these will give room for them to have access to readily cash which will enhance their business transactions and increase their performance. Conclusively, cash flow from operations has no significant effect on the profitability oflisted firms and cash flow from financing activities has a significant effect on the profitability of listed firms.

TABLE OF CONTENTS

Title Page ﾿

Declaration ﾿ 11

Certification ﾿ 111

Dedication ﾿ lV

Acknowledgment ﾿ v

Table of Contents ﾿ Vl

List of Tables ﾿ x

Abstract ﾿ Xl

CHAPTER ONE: INTRODUCTION ﾿

1.1          Background  to the Study ﾿ 1

1.2       Statement  of the Problem ﾿ 3

1.3       Objectives  of the Study ﾿ 4

1.4       Research  Questions ﾿ 4

1.5         Research  Hypotheses ﾿ 4

1.6       Significance   of the Study ﾿ 5

1. 7       Scope of the Study ﾿ 5

1.8        Limitations    of the Study ﾿ 6

CHAPTER TWO:  REVIEWOF RELATED LITERATURE

2.1 ﾿ Conceptual  Framework ﾿ 7

2.1.1 ﾿ Concept  of Cash Flow ﾿ 10

2.1.2 ﾿ Factors  That Affect  Liquidity  Requirement   of a Company ﾿ 13

2.1.3 ﾿ Nature  and Size of      Business ﾿ 13

2.1.4 ﾿ Business   Fluctuations ﾿ 13

2.1.5 ﾿ Production  Policy/  Just-In-Time ﾿ 14

2.1.6 ﾿ Operating  Efficiency ﾿ 14

2.2 ﾿ Theoretical   Framework ﾿ 15

2.2.1 ﾿ The Relatively  Relaxed  Theory: ﾿ 15

2.2.2 ﾿ The Aggressive   Theory: ﾿ 15

2.3 ﾿ Empirical  Review ﾿ 15

CHAPTER THREE: RESEARCH METHODOLOGY

3 .1 ﾿ Research  Design ﾿ 24

3 .2 ﾿ Population  of the Study ﾿ 24

3.3 ﾿ Sample  Size and Sampling   Techniques ﾿ 25

3 .4 ﾿ Sources  of Data ﾿ 25

3.5 ﾿ Data Analysis  Technique ﾿ 25

3.6 ﾿ Definition  of Variables ﾿ 26

3.6.1 ﾿ Independent  Variable ﾿ 26

3 .6.2 ﾿ Dependent  Variable ﾿ 26

3. 7 ﾿ Model  Specification ﾿ 26

3.8 ﾿ Limitation  of the Methodology ﾿ 27

CHAPTER FOUR: DATA PRESENTATOIData Presentation ﾿ N AND ANALYSIS ﾿

4.2 ﾿ Data Analysis ﾿ 28

4.2.1      Data Validity  Test                                                                                                                28

4.2.2    Descriptive   Statistics                                                                                                                                   29

4.2.3      Regression  of the Estimated  Model  Summary                                                                  31

4.2.4      Regression   Results                                                                                                                32

4.3         Test  of Research  Hypotheses                                                                                               33

4.3.1. ﾿ Test of Research ﾿ Hypothesis ﾿ One ﾿ 33

4.3.2. ﾿ Test of Research ﾿ Hypothesis ﾿ Two ﾿ 33

4.3.3. ﾿ Test  of Research ﾿ Hypothesis ﾿ Three ﾿ 33

4.4 ﾿ Discussion  of Fi ﾿ ndings ﾿ 34

CHAPTER FIVE:  SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 ﾿ Summary of Findings ﾿ 36

5.2 ﾿ Conclusions ﾿ 36

5.3 ﾿ Recommendations ﾿ 37

5.4 ﾿ Limitations  of the Study ﾿ 37

5.5 ﾿ Suggestions for Further Research ﾿ 38

REFERENCES

APPENDIX