Open AccessOptimizing Return on Assets through Investment in Property, Plant and Equipment: Evidence from Listed Nigerian Manufacturing Companies
Author(s) -
Joseph O. Udoayang,
Uwem Etim Uwah,
Akabom Ita Asuquo
Publication year - 2020
Publication title -
international journal of management and humanities
Language(s) - English
Resource type - Journals
ISSN - 2394-0913
DOI - 10.35940/ijmh.j0950.0641020
Subject(s) - return on assets , stock exchange , fixed asset , weighted average return on assets , business , investment performance , investment (military) , current asset , manufacturing , stock (firearms) , portfolio , assets under management , return on investment , actuarial science , finance , working capital , economics , engineering , marketing , mechanical engineering , production (economics) , politics , political science , law , macroeconomics
This study examined the extent to which investment in property, plant & equipment (PPE) made by listed manufacturing companies in Nigeria relate with the return on assets (ROA). The non-usage of composite appraisal techniques, other than traditional budgeting techniques was seen as a major problem of investment decisions on PPE. The study adopted the quantitative panel methodology of the ex post facto and correlational research design. Secondary data were extracted from the fact books of the Nigerian Stock Exchange for the period, 2013 – 2018. The number of manufacturing companies listed in the Stock Exchange during this period was 83, which was also taken as the population of the study. The sample used in the study was 69. Three hypotheses were tested at 0.05 level of significance. Multiple and simple regression analyses were used on the data collected, to find the relationship between the independent and dependent variables. The hypotheses tested indicated in the findings that property, plant and equipment had a significant relationship with return on assets of listed manufacturing firms in Nigeria when there is a joint relationship between variables of property, plant & equipment (PPE) and return on asset (ROA). Based on the findings and conclusion, it was recommended that management of manufacturing companies should ensure a holistic use of all techniques, exploring the real and growth options analyses as well as portfolio management techniques involving productive non-current assets, to earn the benefit of return on assets invested.