Financial Performance and Working Capital Management Practices of Nigeria’s Consumer Goods Manufacturing Firms

This study examines the impact of working capital management practices on the financial performance of consumer goods manufacturing firms listed on the Nigeria Stock Exchange. The analysis is based on a sample of 20 firms over a ten-year period from 2011 to 2020, utilizing a generalized method of moment (GMM) model. Four indicators of working capital management, including the cash conversion cycle (CCC), inventory turnover period (IVP), accounts payable period (APP), and accounts receivable period (ARP), are assessed, while return on assets (ROA) is used as the measure of financial performance. The findings reveal that a shorter cash conversion cycle and a higher inventory turnover period positively influence the firm’s financial performance. Conversely, a longer accounts payable period has a negative impact, while a longer accounts receivable period positively affects financial performance. These results highlight the importance of adopting effective working capital management practices for enhancing the financial performance of consumer goods manufacturing firms. The study’s conclusions provide valuable insights for firms, investors, and policymakers, emphasizing the significance of optimizing working capital management to drive financial success.