Effect of Cash Conversion Cycle on the Profitability of Public Listed Insurance Companies

E. Chuke Nwude, Elias I. Agbo and Christian Ibe-Lamberts
Additional contact information
E. Chuke Nwude: Department of Banking and Finance, Faculty of Business Administration, University of Nigeria, Nsukka, Enugu Campus, Nigeria,
Elias I. Agbo: Department of Accounting/Banking and Finance, Faculty of Management and Social Sciences, Godfrey Okoye University, Ugwuomu-Nike, Enugu, Nigeria,
Christian Ibe-Lamberts: Fidelity Bank Plc, Abakaliki, Ebonyi State, Nigeria

International Journal of Economics and Financial Issues, 2018, vol. 8, issue 1, 111-117

Abstract: Cash Conversion Cycle (CCC) constitutes a powerful metric for discovering how efficiently a company manages its working capital. A company that possesses low CCC is more efficient as it turns its working capital over many times in one year and allows it to generate more sales for the cash invested. This paper sets out to investigate the effect of CCC on the Return on Assets of selected Nigerian quoted insurance firms for the period (2000- 2011). The Return on Assets (ROA) is used as a measure of profitability. Data were collected from the annual financial reports of sampled insurance companies. Multiple regression technique was used in analyzing the model for testing the hypotheses. ROA was used as the dependent variable. While CCC was presented as the explanatory variable, Current Ratio, Debt Asset Ratio, Fixed Financial Total Asset Ratio, Growth and Size were all incorporated in the model as control variables. The results indicated that Cash Conversion Cycle had negative and significant effect on profitability. Based on the findings, the study recommends that Nigerian insurance companies should endeavour to reduce their number of days in Cash Conversion Cycle always in order to enhance their profitability.

Keywords: Cash Conversion Cycle; Return on Assets; Working Capital; Profitability; Nigeria (search for similar items in EconPapers)
JEL-codes: G2 G22 (search for similar items in EconPapers)
Date: 2018
References: View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.econjournals.com/index.php/ijefi/article/download/5874/pdf (application/pdf)
https://www.econjournals.com/index.php/ijefi/article/view/5874/pdf (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2018-01-15

Access Statistics for this article

International Journal of Economics and Financial Issues is currently edited by Ilhan Ozturk

More articles in International Journal of Economics and Financial Issues from Econjournals
Bibliographic data for series maintained by Ilhan Ozturk ().