Effect of Working Capital on Profitability of Selected Quoted Firms in Nigeria

Akinlo, Olayinka

doi:10.1177/097215091201300301

Cited by 43 publications

(70 citation statements)

References 17 publications

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“…This is in line with the general expectation and supports the results of Wang (2002), Eljelly (2004), Lazaridis and Tryfonidis (2006) and Akinlo (2012). It also supports the findings of Zariyawati et al (2009) for the Malaysian market.…”

Section: Discussion Of Resultssupporting

confidence: 95%

Working Capital and Profitability in Manufacturing Firms in Malaysia: An Empirical Study

Wasiuzzaman

2015

Global Business Review

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Working capital is an important area of finance that has not been studied as widely as it deserves. This study aims to contribute to the literature on working capital by analyzing its relationship with profitability. This study uses a sample of 160 manufacturing firms in Malaysia, and uses the ordinary least squares (OLS) regression technique, to achieve this aim. The results of this study present negative relationships between working capital (and its components) with profitability. Except for the negative relationship of payables with profitability, the other relationships follow general expectations based on popular finance theory. The results of this study (in comparison with other studies) show that the relationship of working capital (and its components) with profitability may not be as easy as it seems and may be dependent on other influences such as economic policies.

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Section: Discussion Of Resultssupporting

confidence: 95%

Working Capital and Profitability in Manufacturing Firms in Malaysia: An Empirical Study

Wasiuzzaman

2015

Global Business Review

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“…For a set of 66 Nigerian firms Akinlo (2011) reports on contrary, a positive long-run relationship between profitability and liquidity. These results are sustained by Akinlo (2012). For the same set of companies for the period 1997-2007, the author considers the cash conversion cycle as a comprehensive measure of working capital management and suggest that firms' profitability is reduced by lengthening the number of days accounts receivable.…”

Section: Literature Reviewmentioning

confidence: 98%

“…Raheman and Nasr, 2007;Gill, Bigger, and Mathur 2010) report a negative impact of the working capital and liquidity on the profitability level. Opposite findings are advanced by Akinlo (2011) who tests the existence of a long-run relationship between profitability and liquidity for 66 Nigerian firms and discovers a positive effect.…”

Section: Introductionmentioning

confidence: 99%

Financial Performance in the Public Administration Sector: Comparison Between Hungary and Romania

Tămăşilă¹,

Tăucean²,

Artene³

et al. 2018

MNG

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We investigate the long-run relationship between profitability, liquidity and capitalization for companies acting in the public administration and defense sector from Hungary and Romania, using firm-level data for the period 2006-2015. Our panel cointegration analysis proves the existence of a long-run relationship between the analyzed variables. The dols results posit in the favor of a trade-off between liquidity and profitability for Hungary, but not for Romania. At the same time, the capitalization ratio negatively impacts the profitability ratio in Romania. These results are validated by a series of robustness tests, considering different profitability indicators, and partially validated by the fmols analysis. Our findings have noteworthy implications for the financial management of companies acting in the field of public administration and defense, showing different financial management strategies for the companies located in the two analyzed countries.

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“…Consequently, low financial development characterizes Nigeria. This is typified in the declining and inactive capital market operations and currency depreciation that has created instability in exchange rates that have negatively affected the economy (Akinlo, 2012). Subsequently, most firms in Nigeria have faced a myriad of challenges ranging from a scarcity of foreign exchange, to infrastructure deficits, to high banking charges and to lack of raw materials.…”

Section: Introductionmentioning

confidence: 99%

A reassessment of the relationship between working capital management and firm performance: evidence from non-financial companies in Nigeria

Simon

Sawandi

Abdul-Hamid

2018

Investment Management and Financial Innovations

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This paper reassesses the relationship between working capital management (WCM) and firm performance in the Nigerian context. The study is motivated by the limited insights available on the impacts of WCM on firm performance in the country. To date, most studies from Nigeria have been largely descriptive and focused on a small sample size that is non-representative of the population. In addition, there are limited rigorous statistical analyses involved in such studies. This paper addresses the methodological limitations apparent in prior literature and provides a better understanding of the relationship between WCM and firm performance, revealing how firms can manage their operations more profitably. The paper adopts a panel data regression analysis on a sample of 75 non-financial firms listed on the Nigerian Stock Exchange from 2007 to 2015. The results of the analyses showed that WCM variables have an inconsistent relationship with the measures of performance adopted, which were return on assets and Tobin’s Q. Specifically, accounts receivable management and inventory management were negatively associated with the return on assets, while accounts payable management, cash conversion cycle and cash conversion efficiency were positively associated with return on assets. Additionally, accounts receivable management and inventory management were positively associated with Tobin’s Q, whereas accounts payable management, cash conversion cycle and cash conversion efficiency were negatively associated with Tobin’s Q. These results were found to be robust using quantile regression. The results of the quantile regression showed inconsistency across the various quantiles used (0.10, 0.25, 0.50 and 0.75). These findings have two important implications. The first is that WCM variables influence the performance of firms. The second is that the mixed findings partly indicate that firms and managers must understand and formulate WCM policies that reflect their peculiar conditions.

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Effect of Working Capital on Profitability of Selected Quoted Firms in Nigeria

Cited by 43 publications

References 17 publications

Working Capital and Profitability in Manufacturing Firms in Malaysia: An Empirical Study

Working Capital and Profitability in Manufacturing Firms in Malaysia: An Empirical Study

Financial Performance in the Public Administration Sector: Comparison Between Hungary and Romania

A reassessment of the relationship between working capital management and firm performance: evidence from non-financial companies in Nigeria

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