CREDIT MANAGEMENT AND FINANCIAL PERFORMANCE OF LISTED MANUFACTURING FIRMS IN NIGERIA
Abstract
This study investigates the effect of credit management or the financial performance of listed manufacturing firms in Nigeria, using panei data from 100 firm-year observations. Credit anagement is measured through Accounts Receivable Turnover (ART) and Accounts Payable Turnover (APT), while financial performance is assessed using Net Profit Margin (NPM), Debt-to-Equity Ratio (DER), and Return on Assets (ROA.). The study employs Random Effects Coneralized Least Squares (GLS) regression with robust standard errors to address econometric issues such as inconsistent variance in the data and serial correlation.
An expost acto research design was adopted for this study. The target population comprised of listed manufacturing firms in the Nigerian Exchange Limited. A total of ten (10) manufacturing companies were selected through purposive sampling technique. Data were gathered through the extraction of the annual reports and accounts e the manufacturing companies selected as samples including regression analysis to test the study's hypotheses.
The study found that Credit Management has a significant effect on the financial performance manufacturing firms in Nigeria. Accounts Receivable Turnover has a significant effect on e Net Profit Margin (NPM) (Adj. R2= 0.113; F(2.68)=0.2616; p=0.000). Accounts Péceivable Turnover has a significant effect on the Return On Assets (ROA) (Adj. R2= 0.037;
(F37.81)=0.139.13; p=0.000). Accounts Payable Turnover has a significant effect on the Debt Equity Ratio (DER) (Adj. R2= 0.0014; F(2.43)=0.2975; p=0.000).
The findings imply that while credit management does not significantly influence profitability o capital structure (NPM and DER), efficient receivables turnover can enhance asset profitability. These insights are valuable for managers focusing on operational efficiency, investors analyzing firm fundamentals, and policymakers shaping financial regulation in Nigeria's manufacturing sector.
eywords: Credit Management (CM), Financial Performance (FP), Account receivable Trnover (ART), Account Payable Turnover (APT), Net Profit Margin (NPM), Return on ssets(ROA).
Word Count: 309
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