Open AccessWorking Capital Management and Performance of Industrial and Consumer Goods Firms in Nigeria: A Comparative Analysis
Author(s) -
Olaoye,
Clement Olatunji,
Adeboboye,
Roseline
Publication year - 2019
Publication title -
information management and business review
Language(s) - English
Resource type - Journals
ISSN - 2220-3796
DOI - 10.22610/imbr.v11i3(i).2945
Subject(s) - working capital , payment , business , return on capital employed , capital good , capital (architecture) , return on capital , economics , commerce , finance , financial capital , goods and services , economy , capital formation , human capital , market economy , archaeology , history
This study conducted a comparative analysis on working capital management and performance ofindustrial and consumer goods firms in Nigeria. Precisely, the study compared effect of average collectionperiod and average payment period on return on capital employed of selected industrial goods and consumergoods firms. 20 firms were randomly selected over a period of 10 years data were collected from annualreport of the firms. This study used static data analyses to analyze data. Result showed average collectionperiod and average payment period exert insignificant positive effect on return on capital employed ofindustrial goods firms, while both average collection period and average payment period exert insignificantnegative effect on return on capital employed of consumer goods firms. Independent t-test result showedsignificant mean difference between coefficient estimate corresponding to industrial and consumer goodsfirms. This study concluded that there exists significant difference between the effect of working capitalmanagement on performance of industrial goods firms and consumer goods firms when performance ismeasured in terms of return on capital employed. Hence firms in both sub-sectors should be strategic whenmanaging working capital, by setting higher average payment period in a manner that will not crowd-outtheir credit worthiness.