Working Capital Management and Firm Performance: Evidence from Nigerian Listed Firms

Abstract

This paper examines the impact of working capital management on firms' financial performance of thirty manufacturing firms listed on the Nigerian Stock Exchange for the seven-year period 2004-2010. Panel data methodology was employed and pooled OLS was used to estimate the coefficients of the explanatory variables. Results reveal that working capital management (Cash Conversion Cycle) is negatively and significantly related with firm's financial performance (ROA). Thus, efficient management of working capital items would bring about increase in profitability level of firms. Our findings are consistent with prior empirical studies and finance theory.