Working Capital Management and Profitability of the Manufacturing Sector: An Empirical Investigation Of Nestle Nigeria Plc and Cadbury Nigeria PLC

Ikpefan; ochei ikpefan; Owolabi

Working Capital Management and Profitability of the Manufacturing Sector: An Empirical Investigation Of Nestle Nigeria Plc and Cadbury Nigeria PLC

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ochei ikpefan

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Owolabi

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Covenant University

Working Capital Management and Profitability of the Manufacturing Sector: An Empirical Investigation Of Nestle Nigeria Plc and Cadbury Nigeria PLC

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Abstract

Working capital management is very fundamental to the liquidity and profitability of any organisation and the two variables are vital in evaluating the performance and ultimately deciding the survival of any organisation. This study presents an empirical investigation of the relationship between working capital management and profitability using Nestle Nigeria Plc and Cadbury Nigeria Plc as case studies. The study used correlation and regression analysis to analyse data. Quick ratio was used to measure liquidity, current ratio, trade receivable collection and trade payables payment periods were used as efficiency variables to capture the working capital manage-ment policy adopted by these companies while return on equity was used as the profitability variable. Liquidity and efficiency variables were correlated against return on equity. The study found a negative relationship between the liquidity, two of the efficiency ratios and return on equity for Nestle Nigeria Plc while it found a positive relationship between the liquidity, efficiency ratios and return on equity of Cadbury Nigeria Plc. To enhance profitable short-term investments, the study recommends that companies should manage their working capital efficiently by upgrading the quality of their assets while obsolete inventories should be written off.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Ikpefan, ochei ikpefan, Owolabi. 2014. "Working Capital Management and Profitability of the Manufacturing Sector: An Empirical Investigation Of Nestle Nigeria Plc and Cadbury Nigeria PLC". Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 14 (GJMBR Volume 14 Issue C4).

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GJMBR Volume 14 Issue C4

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords

liquidity Profitability working capital management working capital management policy

Classification

GJMBR-C Classification JEL Code: D53

Submission ReceivedDecember 16, 2013
Peer Review Double Blind
Handling Editor
Accepted January 3, 2014
Published January 15, 2014

Version of record

v1.2

Issue date

September 4, 2014

Language

English

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Article Matrices

Total Score: 155

Country: Nigeria

Subject: Global Journal of Management and Business Research

Authors: Ikpefan, O. A., Owolabi, F., Agwu, E.M., Adetula, D.T. (PhD/Dr. count: 0)

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