EFFECT OF WORKING CAPITAL MANAGEMENT ON THE FINANCIAL PERFORMANCE OF COMPANIES LISTED ON THE NIGERIAN EXCHANGE GROUP (NGx)

ABSTRACT

The objective of this study is to examine the effect of working capital management on the financial performance of companies listed on the Nigerian Exchange (NGx). The data used for this study was extracted from the audited financial reports of 15 companies listed on the Nigerian Exchange for a period of 8 years(2014 - 2021), using different regression estimators, it was discovered that accounting receivables period (ARP) was found to be negative and significantly associated with the return on assets (ROA) of companies in Nigeria. Accounting payables period (APP) was found to be positive and significantly associated with the return on assets (ROA) of companies in Nigeria.Current ratio (CR) was found to be positive but and significantly associated with the return on assets (ROA) in Nigeria.The cash conversion cycle (CCC) was found to be positive but not significantly associated with the Return on Assets of companies in Nigeria. Based on the findings, the following were recommended; companies should emphasize prompt payments to suppliers (APP) and accelerate collections from clients (ARP) to optimize cash flows. Healthy liquidity ratios, such as the current ratio, ensuring that the company can meet its short-term obligations without jeopardizing long-term investments should be maintained.