CREDIT MANAGEMENT POLICY AND FIRMS’ PROFITABILITY: EVIDENCE FROM INFANT MANUFACTURING FIRMS IN SOUTHWEST, NIGERIA

Jayeola Olabisi (), Dauda Adewole Oladejo, Jonathan Funminiyi Adegoke and Matthew Adekunle Abioro
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Dauda Adewole Oladejo: Federal University of Agriculture, Abeokuta, Nigeria
Jonathan Funminiyi Adegoke: The Federal Polytechnic, School of Management Ede, Osun State, Nigeria
Matthew Adekunle Abioro: Federal University of Agriculture, Abeokuta, Nigeria

Contemporary Economy Journal, 2019, vol. 4, issue 4, 59-69

Abstract: Credit management policy concerns managing debtors and financing debts. The higher the amount of debts not collected over a period of time, the higher the maintenance costs incurred which invariably impact on profitability. This study assessed the relationship between credit management policy initiatives and profitability among infant manufacturing firms in Southwest, Nigeria. The study adopted a descriptive research design. The convenience sampling technique was used to select ten (10) infant manufacturing firms and secondary data were extracted from annual reports of the selected firms over a period of ten (10) years (2009-2018). The data collected were analysed using descriptive and inferential statistics. The results of the study showed that there was an insignificant, positive relationship between Current Ratio (CR) and profitability at P>0.05; also, there exists an insignificant, positive relationship between Creditor’s Payment Period (CPP) and profitability at P>0.05. However, Debtor’s Collection Period (DCP) and profitability showed a significant, negative relationship at P

Keywords: Credit Management; Profitability; Debtors’ Collection Period; Current Ratio; Creditors’ Payment Period (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2019
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