Working Capital and Financial Performance
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Abstract
Abstract
This study evaluates the effect of working capital management on the firm value of listed consumer goods manufacturing firms in Nigeria from 2010 to 2023. The specific objectives are: (i) assessing the effect of the current ratio on market capitalization, (ii) examining the influence of net working capital on market capitalization. The study is anchored on the matching /hedging plan theory of working capital. This theory indicates that no long term funds are used to finance short term seasonal needs; that is, current assets are equal to current liabilities. The ex-post facto design were adopted using the secondary data sourced from the central bank of Nigeria bulletin, Nigeria stock exchange and financial reports of the sampled firms. Ten consumer goods manufacturing firms were purposively selected. Using the ARDL model, the findings reveal that the current ratio has no significant effect on the market capitalization of listed consumer goods manufacturing firms (negative coefficient = -6.96, significance level = 0.4627 > 0.05). However, net working capital shows a significant negative effect on market capitalization (negative coefficient = -860.36, significance level = 0.0060 < 0.05), The study observed that some studies had explored working capital management with conflicting results among scholars using ordinary least squares (OLS) and fixed or random effect model, there was a limited research specifically focusing on the consumer goods manufacturing sector in Nigeria. Prior investigations into the liquidity management of firms and its subsequent effects on performance in Nigeria have produced inconclusive findings. The study recommends as follows: (i) Striking a balance between liquidity and operational efficiency as a key to optimizing resource utilization and enhancing long-term performance. (ii) Managers should regularly monitor and adjust net working capital to support smooth operations while maximizing profitability and firm value.
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@article{Okwor2026Working,
title = {Working Capital Management and Firm Value of Consumer Goods Manufacturing Firm in Nigeria},
author = {Emmanuel Ejimnkonye Okwor},
journal = {JOURNAL OF ACCOUNTING AND FINANCIAL MANAGEMENT},
year = {2026},
doi = {10.56201/jafm.vol.11.no7.2025.pg10.29},
url = {https://doi.org/10.56201/jafm.vol.11.no7.2025.pg10.29}
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