THE EFFECT OF WORKING CAPITAL MANAGEMENT ON PROFIT ABILITY OF LISTED CONSUMERS FIRMS IN NIGERIA

This study examines the effect of working capital management on the profitability of listed consumer goods firms in Nigeria. Guided by three specific objectives, the research investigates the impact of the cash conversion cycle (CCC), cash collection policy, and debt repayment period on firm profitability. Employing a survey design, data were collected via questionnaires from staff and management of four consumer goods firms in Benue State, including Dangote Cement Company, Benfruit Plant (Teragro Commodities Ltd), Benue Brewery Limited (Nigerian Breweries Plc), and Edd-Tolad Ltd. Theoretical frameworks applied include the Cash Conversion Cycle Theory and Trade-off Theory. Findings indicate that a shorter CCC positively influences profitability by improving liquidity and reducing reliance on external financing. Efficient cash collection policies enhance profitability through improved cash flow and reduced bad debts. The debt repayment period shows a nuanced effect, with balanced credit terms supporting operational stability, while excessive delays harm supplier relationships and increase costs. The study underscores effective working capital management as a strategic tool crucial for financial sustainability in Nigeria’s consumer goods sector. The study recommends that Nigerian consumer goods firms should adopt strategies such as just-in-time (JIT) inventory systems, advanced digital inventory and supply chain management tools, and incentives like early payment discounts to accelerate receivables and improve inventory turnover. This will enhance liquidity, reduce external financing needs, and boost profitability.