Effect of cash conversion cycle on financial performance of listed consumer goods firms in Nigeria

Micheal Ogbuigwe, Samson Aluya and Edidiong John

MPRA Paper from University Library of Munich, Germany

Abstract: This study examined the effect of cash conversion cycle on financial performance of listed consumer goods firms in Nigeria. The specific objectives were toascertain the effect of accounts receivable turnover ratio on return on assets of listed consumer goods firms in Nigeria, to determine the effect of account payable turnover ratio on return on assets of listed consumer goods firms in Nigeria and to assess the effect of inventory turnover ratio on return on assets of listed consumer goods firms in Nigeria The study adopted an ex-post facto research design and utilized a panel data of one hundred and fifty (150) pooled observations gathered from fifteen (15) listed consumer goods firms in Nigeria over a ten (10)-year period (2014-2023). It also employed a panel multiple regression technique to analyze the data via E-views 10.0 statistical package. The study findings revealed that account receivable turnover ratio has a significant positive (Coeff. =0.0778{0.0012}) effect on return on assets of listed consumer goods firms in Nigeria while account payable turnover ratio has a non-significant negative (Coeff. =-0.0590{0.7897}) effect on return on assets of listed consumer goods firms in Nigeria. It also revealed that inventory turnover ratio has a significant positive (Coeff. =1.5166{0.0472}) effect on return on assets of listed consumer goods firms in Nigeria. It was thus concluded that cash conversion has a significant effect on financial performance of listed consumer goods firms in Nigeria. The recommendations made included that listed consumer goods firms in Nigeria should prioritize efficient accounts receivable management by implementing effective credit policies, credit monitoring, and debt collection strategies for enhanced financial performance.

Keywords: Cash conversion cycle; account receivable turnover; account payable turnover ratio; inventory turnover ratio; return on assets (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Date: 2025-01-07
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Published in International Journal of Humanities Social Science and Management 1.5(2025): pp. 170-185

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