LIQUIDITY MANAGEMENT AND ITS IMPACT ON FINANCIAL PERFORMANCE OF QUOTED CONSUMER GOODS COMPANIES IN NIGERIA
Abstract
This study empirically analysed the impact of liquidity management on financial performance of quoted consumer goods companies domiciled in Nigeria. The population of this study consists of all consumer goods companies whose shares were traded on the floor of the Nigeria stock Exchange from 2009 to 2020, taking into consideration, the period post global economic meltdown, and the subsequent lull in business activities due to the COVID-19 pandemic. One of the greatest effects of the dreaded COVID-19 pandemic and subsequent containments and lock downs all across the globe was the problem of distribution and supply chain administration by consumer goods companies and supply chain experts/specialists especially. Companies were forced to come up with unique and innovative ways of sourcing raw materials as seaports and airports were close which presented a logistics nightmare. The sample size was 7 consumer goods companies whose shares were traded on the floor of the Nigeria stock Exchange. The data were obtained from the annual reports and accounts of the sample companies and Nigerian Stock Exchange Fact Book. The method of data analysis used in this study is the Least Squares Regression Method. The results showed a positive and a weak direct relationship between cash ratio (0.0134) and return on assets of quoted consumer goods companies in Nigeria. Also, the results showed a negative and weak inverse relationship between current ratio (0.0125) and return on assets of quoted consumer goods companies in Nigeria. The results also showed a negative and a weak inverse relationship between quick ratio (0.0034) and return on assets of quoted consumer goods companies in Nigeria. Therefore, the study recommends that consumer goods companies should focus on improving their asset utilization ratio so as to improve their performance. This is because a change in the liquidity management of consumer goods companies would not have significant influence on their financial performance.
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