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WORKING CAPITAL MANAGEMENT AND PROFITABILITY OF FIRMS IN NIGERIA

Abstract

This study was conducted in order to ascertain the nature of the relationship between working capital management and profitability of firms in Nigeria. The cluster sampling and simple random sampling techniques were adopted in this study. From a population of 220 firms listed on the Nigerian Stock Exchange as at 3F' December, 2011, a sample of 142 companies was selected. A cross-sectional data of firms for 2009-2011 was collected from the Nigerian Stock Exchange Fact Book and the annual reports of the sampled firms. The data collected were analysed using Ordinary Least Squares (OLS) regression technique. All of the explanatory variable (LQD, DBT, CCC) except CCC were . positively associated with profitability of finns in Nigeria. It was also found out that only LQD is significantly associated with profitability. Based on the result of this study it was recommended amongst others that, the federal government of Nigeria, through her relevant agencies, should emphasize optimization of the liquidity of firms in Nigeria. This is necessary so as to enhance profitability of firms doing business in the Federal Republic of Nigeria

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